The Trump administration is set to revive the collection of federal benefits from student-loan borrowers who are in default, effective May 5. This decision follows a hiatus since March 2020, when pandemic relief measures halted collections. Education Secretary Linda McMahon emphasized the need for borrowers to resume payments, warning that failure to do so could result in negative impacts on their credit scores and the withholding of federal benefits such as tax refunds and Social Security payments. The Department of Education will notify defaulted borrowers in the coming weeks about their options to avoid involuntary collections. The Treasury Offset Program will be reinstated, allowing the government to collect overdue debts by withholding a portion of federal payments. With millions of borrowers at risk, advocates have criticized this move as detrimental to working families, arguing that it could exacerbate economic instability. The program aims to enforce responsible repayment to support both individual financial health and the economy.
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