The government collection tools for student loans are very powerful. The government has extraordinary power to collect student loans. The government can seize tax refunds, deny new student loans and grants, garnish wages without a court order, take a portion of Social Security benefits, and charge very large collection fees. Most crimes can only be prosecuted for limited periods of time, but there is no time limit for collection on federal student loans.
It is difficult to be completely protected from government student loan collection. Usually there is at least one way that the government can collect, or try to collect, from a borrower. This is why it is so important for borrowers to learn about ways to get out of default, including possible cancellation of federal student loans. The government’s collection powers only kick in after a borrower defaults.
The four categories listed below are used outside of court.