The Trump administration has resumed collecting defaulted student loan payments for the first time since 2020, while federal data show that just a third of borrowers have returned to regularly paying back their loans.
Beginning May 5, the Department of Education will start collecting unpaid debt from around 5 million borrowers by withholding payments in tax refunds, wages, and Social Security benefits. The agency first announced the recollection process in an April 21 press release, warning that student debt has grown to more than $1.6 trillion in the past five years.
Only a third of the 43 million borrowers have made regular repayments on their loans since March 2020, NBC News reported based on Education Department data.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Secretary of Education Linda McMahon said in the press release.
The move comes after former president Joe Biden repeatedly tried to cancel hundreds of billions in student debt through executive action. In 2022, for example, the Biden administration announced a $400 billion plan to erase up to $20,000 per borrower. The Supreme Court struck it down months later, ruling that Biden lacked the authority to implement such widespread debt cancellation without congressional approval.
According to April’s press release, all borrowers in default will receive emails asking them to “make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.”
Borrowers who fail to make payments on time will now see their credit scores go down “and in some cases their wages automatically garnished,” McMahon wrote in an April op-ed for the Wall Street Journal.
“Borrowing money and failing to pay it back isn’t a victimless offense,” McMahon continued. “Debt doesn’t go away; it gets transferred to others. If borrowers don’t pay their debts to the government, taxpayers do.”
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