In a long-overdue move, the Trump administration has restarted student loan collections for millions of borrowers who have been in default, ending a years-long pause that let many off the hook for their obligations under the Biden administration. After years of government handouts and deferred accountability, this Trump administration policy sends a clear message to those who took advantage of the Biden-era policy that debts must be repaid.
After nearly five years, the U.S. Department of Education restarted its collection efforts on defaulted student loans on Monday, resulting in millions of borrowers being notified that their loans were being put into collections. Secretary of Education Linda McMahon said, "American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.”
“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear,” McMahon said in a statement.
According to the Department of Education (DOE), 42.7 million Americans owe over $1.6 trillion in student loans. Of those, more than five million haven’t made a payment in over a year and are in default, many for more than seven years, while another four million are seriously delinquent. The DOE warned that nearly 10 million borrowers could default in the next couple of months if this trend continues. Only 38 percent of borrowers are on track with their repayment plans.
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“All borrowers in default will receive email communications from FSA ... urging them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation," the Department stated. "Later this summer, FSA will send required notices beginning administrative wage garnishment."
If borrowers fail to pay their student loans, the federal government can withhold their paychecks, Social Security retirement, and disability benefits.
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