What Floridians should know as student loan penalty pause ends
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Illustration: Sarah Grillo/Axios
The U.S. Department of Education is once again referring student loan borrowers in default to debt collectors, which could spell financial trouble for many Floridians.
Why it matters: Over 2.7 million people in Florida — about 45% under 35 years old — owe $105.5 billion combined in student loans.
- Borrowers in Florida have an average of $39,262 in student debt, above the national average of $37,853, according to the Education Data Initiative.
The big picture: After a five-year penalty pause, the 5.3 million borrowers in default nationwide could see their wages garnished if they don't resume payments.
- Federal student loans, including those in default, have not been referred for collection since March 2020, when leniency was initiated during the COVID pandemic.
By the numbers: Only 38% of borrowers are up to date on their student loans, according to the department. 4 million borrowers are in "late stage delinquency," officials said, or 91 to 180 days delinquent.
- There could be nearly 10 million borrowers in default in a few months, officials say.
When will collections start?
The department restarted involuntary collections on Monday through the Treasury Offset Program, which collects delinquent debts that people owe to government agencies through wage garnishment and other methods.
- Wage garnishment is a legal procedure in which employers are ordered to withhold a person's earnings for the payment of a debt, such as unpaid child support.
- There will be a 30-day notice, after which the department will begin garnishing wages for borrowers in default.
- Student loans are considered in default after 270 days without payments.
What are the next steps?
- Check your default status by logging into StudentAid.gov or running a free credit report.
- Borrowers can sign up for an income-driven repayment (IDR) plan or loan rehabilitation.
- Income-driven repayment plans like SAVE base payments on income and family size, not loan balance. A court blocked SAVE and similar plans in February, but as of March 26, the online application is available again.
Yes, but: Some experts are worried that SAVE is on the chopping block.
Between the lines: The move is part of the Trump administration's efforts to roll back Biden-era student loan forgiveness policies.

