President Donald Trump has restarted collections on defaulted student loans, ending a five-year pause that allowed borrowers to avoid wage and federal benefits garnishment. James Southern, 63, is among those facing financial struggles due to the restart.
Southern received a warning from his student-loan servicer in March stating he owed $9,942 to make his account current or pay $1,414.71 towards his delinquent balance. With no affordable payment options provided by the servicer, Southern fears falling into default and facing wage garnishment or even Social Security withholding.
The Department of Education has notified 195,000 defaulted borrowers that a portion of their federal benefits will be withheld starting in June. The department has collected $100 million from borrowers behind on payments since May 5.
Critics argue that restarting collections is not the right approach, citing the impact on vulnerable borrowers who rely heavily on minimal income and Social Security. Some experts suggest that borrowers should have access to more affordable payment options, such as income-driven repayment plans, which are being eliminated under a recent tax bill.
As Southern struggles to make ends meet, he urges his servicer to provide more assistance and options rather than just making payments. The fate of his financial future remains uncertain, leaving many student loan borrowers concerned about the consequences of defaulting on their loans.
Source: https://www.businessinsider.com/boomer-cant-afford-retirement-high-student-loan-payment-wage-garnishment-2025-5