Washington, D.C. – The U.S. Department of Education recently announced that it will resume collections of defaulted student loans on May 5, marking the end of a five-year hiatus. This decision comes amid the backdrop of a growing number of borrowers falling behind on their payments, with more than 5 million borrowers not having made a payment in the past year.

With over 42.7 million student loan borrowers in the U.S. collectively owing $1.6 trillion, the department is taking steps to address the issue before the number of defaults increases further. U.S. Secretary of Education Linda McMahon emphasized the need to protect American taxpayers from bearing the burden of irresponsible student loan policies.

In the coming weeks, the department plans to notify borrowers in default via email, encouraging them to make payments or enroll in repayment plans through a government website. Subsequently, starting on May 5, borrowers who remain in default will be referred to a collections program administered by the Treasury Department.

However, the impending resumption of loan collections has raised concerns among advocates like Aissa Canchola Bañez, the Policy Director for the Student Borrower Protection Center. She highlighted the challenges that millions of Americans face, particularly older borrowers who struggle to repay their loans. According to a 2017 report, nearly 40% of federal borrowers over 65 were in default on their student loans, impacting their financial stability.

Bañez also noted that falling behind on loan payments can negatively impact borrowers’ credit scores, making it harder to secure credit for essential needs like housing. The Education Department further indicated that it would begin the process of wage garnishment later in the summer, underscoring the implications of defaulting on student loans.

As the department gears up for the resumption of loan collections, borrowers are urged to take proactive steps to address their defaulted loans to avoid facing potential financial repercussions in the future.