Table of Contents
- Loan Collections Will Resume
- How Navia Can Help: A Full-Spectrum Education Benefit Solution
- Why Offer Student Loan Repayment Now?
- Employers Can Help
- Conclusion
- FAQs
Loan Collections Will Resume
The U.S. Department of Education announced that its Office of Federal Student Aid (FSA) will resume collections on its defaulted federal student loan portfolio starting Monday, May 5th. The Department has not attempted collecting on defaulted loans since March 2020. The initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default. A staggering 42.7 million borrowers owe more than $1.6 trillion in student debt. It is expected that about 10 million or nearly one-quarter of borrowers to default by the fall.
This decision will impact millions of Americans who have struggled with student loan debt and who many now face serious legal and financial consequences as a result of defaulting on their loan. As collections restart, employers have a unique opportunity — and responsibility — to help ease financial stress and improve retention through education benefits, including student loan repayment support.
Navia makes it easy for employers to offer meaningful education benefits through our Education Benefit Administration program.
What’s Happening on May 5th?
After several years of pauses due to COVID-19 and administrative delays, collections activities — including wage garnishments, tax refund offsets, and other default recovery measures — will fully resume for defaulted federal student loans.
Employees who are already financially stretched could soon face even more hardship, making employer-sponsored education benefits more valuable than ever. Defaulted federal student loans are reported to credit bureaus and damage the loan holder’s credit rating and perhaps their future ability to buy a car, a house, or to get a credit card.
How Navia Can Help: A Full-Spectrum Education Benefit Solution
Navia’s Education Benefit Administration is designed to support your workforce at every stage of their financial journey — from proactive student loan repayment to tuition assistance for ongoing education. Our solution includes:
Student Loan Repayment Programs
Direct employer contributions toward employee student loans, reducing principal faster and helping employees avoid collections or default.
Tuition Assistance Management
Streamlined administration of tuition reimbursement programs to support employee upskilling and retention.
Why Offer Student Loan Repayment Now?
In today’s economic climate, offering education benefits is more than a nice-to-have; it’s a competitive advantage. An employer-sponsored student loan assistance program is a high-impact benefit that addresses one of the biggest sources of financial stress for today’s workforce — and it pays off for employers, too. Review our business case study.
✔️Reduce Employee Stress and Increase Productivity
Financially stressed employees are 2.2 times more likely to seek new jobs. Education benefits demonstrate your investment in their future — both financially and professionally.
✔️ Boost Recruitment and Retention
Top talent — especially younger workers, are increasingly expecting student loan support from their employers. Stand out in a crowded market with a benefit that truly matters.
✔️ Maximize Tax Advantages
Thanks to the CARES Act and subsequent extensions, employers can contribute up to $5,250 annually toward employees’ student loans on a tax-free basis through 2025.
Employers Can Help
The resumption of defaulted federal loan collections is a critical moment for employers to act. Offering student loan repayment and other education benefits not only supports your employees — it strengthens your organization’s culture, productivity, and bottom line.
Partner with Navia to build a customized education benefits program that makes a real difference.
Conclusion
The resumption of federal student loan collections is a critical reminder of the financial challenges many Americans currently face. By offering education benefits like student loan repayment support and tuition assistance, employers can help reduce financial stress, boost retention, and build a stronger, more resilient workforce. Partner with Navia to deliver education benefits that make a real impact — because when your employees succeed, your business succeeds.
FAQs
1. What is happening with federal student loans on May 5th?
On May 5th, 2025, the U.S. Department of Education’s Office of Federal Student Aid will resume collections on defaulted federal student loans. This means employees in default could face wage garnishments, tax refund offsets, and other recovery actions.
2. How can Navia’s Education Benefit Administration help my employees?
Navia’s Education Benefit Administration supports employees by offering direct student loan repayment contributions, managing tuition assistance programs, and providing financial wellness resources to help employees stay out of default and reduce debt.
3. Why should employers offer student loan repayment benefits now?
With collections resuming, employees are at greater risk of financial hardship. Offering student loan repayment support now can help reduce employee stress, improve productivity, enhance retention, and offer tax advantages for employers.
4. What are the tax benefits of offering student loan repayment assistance?
Thanks to provisions from the CARES Act (extended through 2025), employers can contribute up to $5,250 annually toward an employee’s student loans on a tax-free basis — making it a financially smart benefit for both employers and employees.
👉 Learn more about Navia’s Education Benefit Administration today.
Navia and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice, and Navia may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state, or local; and/or its application to the clients’ business activities.