After years of pandemic-era protections, student loan collections have resumed across the United States, thrusting millions of borrowers back into repayment—and into potential legal jeopardy. With automatic forbearance officially ended, agencies have returned to aggressive tactics: wage garnishments, tax refund seizures, and credit score hits. For those who default, the consequences can extend far beyond financial hardship.
Joseph Lento, founder of Lento Law Firm, has a history of representing students and professionals facing institutional and regulatory challenges. As student loan enforcement returns to full force, he notes an uptick in legal complications that borrowers weren’t prepared to face.
Lento says, “Many borrowers are being hit with collection actions before they’ve had a real chance to understand what they owe or how to contest it. The return of collections has exposed gaps in communication, oversight, and legal recourse, leaving too many people scrambling to defend themselves after the fact.”
Federal authorities have resumed using powerful administrative tools to recoup defaulted loans. These include Treasury offsets—where tax refunds are intercepted—and wage garnishments initiated without court orders. While borrowers technically have the right to contest these actions, many don’t receive timely notice or lack the resources to navigate appeals.
Lento continues, “Administrative collections bypass traditional court procedures, which means borrowers can face real financial penalties without ever having their day in court. That raises serious due process concerns, especially for low-income or first-generation borrowers who may not even realize they have rights.”
The impact is particularly severe for professionals holding or seeking licenses. In some states, student loan default can trigger automatic license suspension or denial. Nurses, teachers, and other credentialed workers risk losing the very careers they need to repay their debts. Even when such laws are not enforced, the threat alone can be destabilizing.
Lento further continues, “It’s a vicious cycle: borrowers lose their license because they can’t pay their loans, but without a license, they can’t work to make payments. We’ve seen clients in healthcare, education, and other fields blindsided by these hidden penalties, even in cases where they were actively trying to rehabilitate their loans.”
At the institutional level, schools are also ramping up pressure. Some colleges are withholding transcripts from students with outstanding balances, effectively blocking them from transferring, applying for graduate programs, or securing employment. Though several states have passed laws to curb this practice, it remains legal in many jurisdictions.
Lento concludes, “Transcript withholding is one of the most punitive and counterproductive tools schools can use. It disproportionately hurts students from lower-income backgrounds and can shut down a person’s entire educational and professional future over a relatively small balance.”
The broader economic implications are also coming into focus. Consumer advocates warn that resuming aggressive collections during a time of inflation and labor market volatility may drive defaults higher and exacerbate financial instability. Borrowers who fell behind during the pause often face backdated interest and confusion about their current status, compounding their challenges.
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This article is an opinion piece for informational purposes only. VC Mag and its affiliates do not take responsibility for the views expressed. Readers should conduct independent research to form their own opinions.
Written in partnership with Tom White
