“This is just cruel and doesn’t have to happen,” said the Debt Collective.
On Monday, the Trump administration declared its intention to reinstate forced collection measures for those who have defaulted on federal student loans. This includes wage garnishment, seizing tax refunds, and Social Security benefits, along with “other actions to help borrowers get back into repayment,” a phrase used by the U.S. Department of Education.
“Resuming collections safeguards taxpayers from bearing the financial burden of federal student loans that borrowers accepted to fund their higher education,” the Department of Education announced, revealing that collections will recommence on May 5. “This effort will be supported by a robust communication and outreach campaign to ensure borrowers understand their options for resuming payments or exiting default.”
The Department of Education mentioned that the U.S. Treasury Offset Program will manage the garnishment of borrowers’ funds, anticipated to start again this summer.
The Department of Education commented further:
Although Congress has mandated that student and parent borrowers start repaying their loans in October 2023, the Biden-Harris administration did not end the pause on collections, leaving borrowers in a state of uncertainty. The previous administration did not process applications for income-driven repayment and promoted ill-advised “on-ramps” and unauthorized loan forgiveness programs to curry favor with borrowers while obscuring the increasing rates of delinquency and default.
“American taxpayers will no longer bear the brunt of irresponsible student loan policies,” stated Linda McMahon, billionaire U.S. Education Secretary, on Monday.
The resumption of repayments is a part of the Trump administration’s three-part strategy to revamp the federal student loan system, valued at $1.6 trillion. This includes initiating collections on defaulted loans and seeking to terminate President Joe Biden’s Saving on a Valuable Education (SAVE) plan, an income-driven repayment scheme currently halted by a federal appeals court. Additionally, President Donald Trump has issued an executive order to restrict eligibility for the Public Service Loan Forgiveness program.
Last month, the American Federation of Teachers initiated a lawsuit against the Trump administration after the Department of Education halted access to income-driven repayment plan applications and secretly instructed loan services to stop processing these applications.
No collections on defaulted student loans have been made since March 2020, when the first Trump administration paused repayments due to the emerging Covid-19 pandemic. This pause, extended multiple times, was scheduled to end in September 2023. Efforts by the Biden administration to cancel some or all loan debt for over 45 million student borrowers were blocked by the conservative U.S. Supreme Court in 2023.
“The Biden administration misled borrowers: The executive branch lacks the constitutional authority to erase debt, nor do loan balances simply vanish,” McMahon stated. “Billions have already been shifted to taxpayers.”
“Moving forward, the Department of Education, together with the Department of Treasury, will manage the student loan program responsibly and in accordance with the law, aiming to assist borrowers in returning to repayment—for both their personal financial health and the economic future of our nation,” she added.
As McMahon and the Trump administration aim to dismantle the Department of Education—a primary objective of Project 2025 led by the Heritage Foundation—Trump has directed that the administration of federal student loans be transferred to the Small Business Administration (SBA), which McMahon led during Trump’s first term.
About 5.6 million student borrowers were in default at the end of 2024. The Department of Education warns that “there could be nearly 10 million borrowers in default within a few months” after repayments restart. This represents approximately 25% of the current student loan portfolio. Failing to make timely repayments on student loans results in lower credit scores for borrowers, thereby reducing their economic activity—a cascade effect with significant consequences for the already slowing U.S. economy.
“They bailed out banks, corporations, and airlines. Yet, when it’s about student debt, suddenly it’s ‘too expensive,'” remarked the Student Debt Crisis Center (SDCC) on social media. “Parents delaying retirement, grads postponing starting families—it’s not just 45 million individual issues; it’s a national crisis,” they added.
SDCC executive director Mike Pierce criticized the move, stating, “Federal law offers borrowers a path out of default and the right to affordable payments. Since February, Donald Trump and Linda McMahon have obstructed these borrowers’ way out of default, pushing them towards the government’s debt collection machinery.”
“This is cruel, unnecessary, and will only exacerbate the economic turmoil for working families nationwide,” Pierce concluded.
Others proposed solutions that have been successful in other nations, such as not collecting the debt and providing tuition-free higher education—though the chances of these being implemented in what many leftists describe as the U.S.’s “late-stage capitalism” remain slim.
“If the Trump/Musk administration truly aimed for ‘government efficiency,’ they would not pursue unpayable debts,” said the Debt Collective, a debtors’ union, referring to Elon Musk, who leads the Department of Government Efficiency. “They would simply cancel the debt to stimulate the economy.”
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