Student loan borrowers in default begin facing debt collections

Move comes after Secretary of Education Linda McMahon said the Biden administration 'misled borrowers’.

Millions of student loan borrowers in default will start receiving notices on Monday that they are being put into collections.

The move comes after the Department of Education said last month that it is trying to protect U.S. taxpayers "from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education." 

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Secretary of Education Linda McMahon said in a statement. "The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear." 

The Department of Education said its "Office of Federal Student Aid (FSA) will resume collections of its defaulted federal student loan portfolio on Monday, May 5th," after not doing so since March 2020, which was the beginning of the coronavirus pandemic.

"Today, 42.7 million borrowers owe more than $1.6 trillion in student debt," according to the Department. "More than 5 million borrowers have not made a monthly payment in over 360 days and sit in default -- many for more than 7 years -- and 4 million borrowers are in late-stage delinquency (91-180 days). As a result, there could be almost 10 million borrowers in default in a few months."  

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