The education department will begin collection next month on student loans that are in default, including the garnishing of wages for potentially millions of borrowers, officials said Monday.
Currently, roughly 5.3 million borrowers are in default on their federal student loans.
The DonaldTrump administration’s announcement marks an end to a period of leniency that began during the Covid-19 pandemic. No federal student loans have been referred for collection since March 2020, including those in default. Under Joe Biden, the education department tried multiple times to give broad forgiveness of student loans, only to be stopped by courts.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,”Linda McMahon, the education secretary, said.
Beginning 5 May, the department will begin involuntary collection through the treasury department’s offset program, which withholds government payments – including tax refunds, federal salaries and other benefits – from people with past-due debts to the government. After a 30-day notice, the department also will begin garnishing wages for borrowers in default.
The decision to send debt to collections drew criticism from advocates, who said borrowers had experienced whiplash and confusion with the changing student loan policies between the Biden and Trump administrations.
“This is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country,” said Mike Pierce, executive director of the Student Borrower Protection Center.
Already, many borrowers have been bracing for obligations coming due.
In 2020,Trumppaused federal student loan payments and interest accrual as a temporary relief measure for student borrowers. The pause in payments was extended multiple times by the Biden administration through 2023, and a final grace period for loan repayments ended in October 2024. That meant tens of millions of Americans had to start making payments again.
Borrowers who do not make payments for nine months go into default, which is reported on their credit scores and can go to collections.
Along with the borrowers already in default, around another 4 million are 91 to 180 days late on their loan payments. Less than 40% of all borrowers are current on their student loans, department officials said.
Layoffs at the federal student aid office at the education departmenthave made it harder for students to get their questions answered, even if they wanted to pay their loans, said Kristin McGuire, executive director for Young Invincibles, a group that focuses on economic security for younger adults.
And questions are swirling about certain income-driven repayment programs after a February court ruling blocked some of the payment plans. Borrowers in the more lenient, Biden-era Save plan were placed in forbearance, in which borrowers receive relief from payments but still accrue interest. The education department in February took down applications for income-driven repayment programs – which tie a monthly payment to a person’s income level – only to bring them back online a month later.
“Things are really difficult to understand right now. Things are changing every day,” McGuire said. “We can’t assume that people are in default because they don’t want to pay their loans. People are in default because they can’t pay their loans and because they don’t know how to pay their loans.”