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Student Loans Restart: Debt Collectors Return

Selina Roberts

April 22, 2025
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6 min read

The Calm Before the Storm

After a three-year pause on federal student loan payments, the restart is here. With it comes a wave of concerns, particularly the return of debt collectors. For millions of Americans, the Student Loans Restart is more than just a resumption of monthly payments it’s a return to financial stress, aggressive collection tactics, and renewed obligations.

Understanding the full impact of this restart is critical. From wage garnishment to tax refund seizures, borrowers must brace themselves. This blog will walk you through everything you need to know about the Student Loans Restart, the reactivation of collections, and how to protect yourself.

What is the Student Loans Restart?

The Student Loans Restart refers to the resumption of federal student loan payments, collections, and interest accumulation after the COVID-19 payment pause. Initiated in March 2020, the pause was a part of the CARES Act relief measures. It provided a temporary break for over 40 million borrowers during a time of economic uncertainty.

Now, with the federal government ending the pause in late 2023, the system is rebooting. Payments are due again. Interest is accruing. And yes debt collectors are back in action.

Focus Keyword Density: 2% of 2500 words = 50 mentions of “Student Loans Restart”

Why Did Payments Pause in the First Place?

The COVID-19 pandemic sparked one of the worst economic downturns in U.S. history. With unemployment rates soaring and families struggling to stay afloat, the government stepped in with financial relief. A key part of that plan was the halt of federal student loan payments.

This pause meant:

No monthly loan payments required
0% interest rate on eligible loans
No collections on defaulted loans

The intention was clear: reduce financial stress and prevent defaults. Over time, the pause was extended nine times, offering prolonged relief.

How the Restart Affects Borrowers

The Student Loans Restart changes everything for borrowers who’ve adapted to life without monthly payments. Here are some immediate impacts:

Resumed Monthly Payments: Payments are now required again.
Accruing Interest: Interest is back, making loans more expensive over time.
Reactivated Delinquencies: If you were delinquent before the pause, that delinquency is now active.
Credit Risk: Missed payments will start affecting credit scores again.

If you don’t take action, you risk falling into default which opens the door to debt collectors.

Debt Collectors Are Back: What This Means

With the Student Loans Restart, the Department of Education has resumed partnerships with private collection agencies. These agencies are tasked with recovering defaulted loans using a variety of aggressive methods.

Here’s what that means for borrowers:

Wage Garnishment: Up to 15% of your paycheck can be taken without court approval.
Tax Refund Seizure: The IRS can withhold tax refunds to repay student debt.
Social Security Offsets: Seniors can lose a portion of their benefits.
Harassment and Calls: Collectors are legally allowed to contact you at work and home.

These measures are serious. Understanding your risk and rights is essential.

Who is at Risk of Collections?

Not all borrowers are equally affected by the Student Loans Restart. Those most at risk include:

Borrowers who were in default before March 2020
Borrowers who have missed payments since the restart
People with FFEL (Federal Family Education Loans) or Perkins Loans not held by the Department of Education

Real-World Example:

Angela, a teacher from Michigan, had defaulted on her FFEL loan before the pandemic. With the restart, her debt was handed back to collections. She saw her tax refund seized within two months.

Common Collection Tactics to Watch For

Debt collectors often use tactics that feel invasive or intimidating. Knowing what to expect can help you prepare:

Phone Calls and Letters: Regular contact, often daily.
Threats of Legal Action: Some collectors threaten lawsuits (though not all follow through).
Settlement Offers: Collectors may offer to “settle” your loan for less than you owe often with strings attached.
Pressure to Rehabilitate Quickly: They may urge you into plans that aren’t right for your situation.

Important Note: Collectors must follow the Fair Debt Collection Practices Act (FDCPA). They cannot harass you, lie, or threaten illegal actions.

What Borrowers Can Do Now: A Step-by-Step Guide

Step 1: Log Into Your Loan Account

Go to StudentAid.gov to review your loan servicer, balance, and payment due date.

Step 2: Check Loan Status

If your loan is in default, you’ll see it marked clearly. If not, confirm your payment plan and due dates.

Step 3: Contact Your Loan Servicer

Ask about repayment options, including:

Income-Driven Repayment (IDR) Plans
Consolidation to get out of default
Loan Rehabilitation Programs

Step 4: Consider the Fresh Start Program

The Department of Education’s Fresh Start initiative gives defaulted borrowers a one-time opportunity to:

Return loans to good standing
Stop collections and garnishments
Restore eligibility for financial aid

Step 5: Document Everything

Keep a record of all conversations, payment confirmations, and letters from debt collectors.

Government Relief Programs Still Available

Several federal programs can help you manage or even eliminate student debt:

Income-Driven Repayment Plans: Lower monthly payments based on income.
Public Service Loan Forgiveness (PSLF): Forgives debt after 10 years of qualifying payments.
Teacher Loan Forgiveness: For educators in low-income schools.
Disability Discharge: For borrowers unable to work due to a disability.

These programs remain in effect even after the Student Loans Restart.

Legal Rights and Protections You Should Know

Federal law offers protections to borrowers facing collections:

FDCPA Compliance: Collectors cannot use abusive or deceptive tactics.
Right to Dispute: You can request verification of debt within 30 days.
Bankruptcy Considerations: While difficult, student loans can sometimes be discharged in bankruptcy.
Statute of Limitations: In some states, there’s a time limit for collections on private loans.

Always seek legal advice if you receive a lawsuit notice or garnishment order.

Key Takeaways

The Student Loans Restart marks a turning point. While it signals a return to normalcy for some, it also revives old financial fears for others. Debt collectors are back. Borrowers need to act quickly to avoid severe consequences.