Student Loan Collections Resume for Over 9 Million Borrowers Next Year

More than 9 million student loan borrowers face renewed wage garnishment and tax refund seizures next year.

As pandemic forbearance on federal student loans expired last year, over 9 million borrowers in default—collectively owing $234 billion—are poised to confront resumed collections. This development signals a structural shift in federal debt recovery efforts that had been paused during the health crisis.

The expiration ended a period during which borrowers could halt payments without penalties, delaying widespread defaults. Defaults increased again in late 2025 and early 2026, with the highest rates over 25 percent in states like Mississippi, Louisiana, and New Mexico. Collections such as wage garnishment and tax refund seizures, previously suspended, are expected to restart next year. Experts including Betsy Mayotte of The Institute of Student Loan Advisors and Preston Cooper of the American Enterprise Institute note that many borrowers were caught off guard by the sudden resumption, partly due to inconsistent government communication. Some states continue to offer counseling and tax credits to assist struggling borrowers.

Collections are slated to resume next year, although the exact timing remains unspecified.

Collections are coming for millions of student loans in default
By Tim Henderson, Stateline