The three most common government collection tools, Tax Refund Offsets, Administrative Wage Garnishment, and Federal Benefits Offsets, all occur outside of court. It is less common for the government to sue to collect on student loans because it has so many tools to use outside of court. Still, litigation is an additional collection power and the government does use it sometimes.The government will also hire collection agencies to try to pressure you to pay and charge very high collection fees. These powers kick in only after you have defaulted on a loan. This is why it is so important to contact your loan servicer and look for possible solutions before you end up in default.
There is usually at least one tool available to the government to collect, or try to collect, from a borrower. You will most likely be safe from federal student loans collection only if you do not have significant federal benefits or wages, you do not get a tax refund, and you do not have any other collectible assets. Even if you are safe from collection now, this situation may be only temporary. Because there is no time limit on government student loan collections, the debt may still come back to haunt you in the future.
The powerful government collection tools may put you in a terrible trap, especially if you are trying to go back to school. This does not mean you should give up. There are ways to recover if you are in this situation. You should then review the ways to repay as a way to get out of default on federal loans. You should also review the various federal loan cancellation options to see if any apply to you. Even if you choose not to pursue avenues out of default, you have the right to fight back against debt collection agency harassment or abuse.