More than five million Americans have been hit with a dire warning that their wages will soon be garnished to pay any student loan debts which are in default.
Education Department Secretary Linda McMahon banished any hope that Biden-era forgiveness schemes and pauses would continue in the Trump administration.
‘There will not be any mass loan forgiveness.’
In fact, the department is instead seeking to claw back debts through involuntary collections beginning May 5.
The Trump 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, even those in default, in an effort to support Americans during the Covid crisis as the economy tanked and workplaces laid off staff.
The pause was extended under former President Joe Biden, who also sought to give broad forgiveness of student loans, only to be stopped by the courts.
Everyday Americans are already toughing it with a mounting cost of living crisis, but now the 5.3million with defaulted student loan debts will receive even less in their weekly pay checks.
More than five million Americans have been hit with a dire warning that their wages will soon be garnished to pay any student loan debts which are in default
The Trump administration’s announcement marks an end to a period of leniency that began during the COVID-19 pandemic
A further four million Americans could be in default on their loans within months, which would put nearly 25 per cent of the federal student loan portfolio in the red.
A loan is considered in default if there are no payments made within a nine month window. This is reported on a borrower’s credit score and can go to collections.
The four million Americans teetering on the brink of default are anywhere between 91 and 180 days late on their loan payments.
The department will begin involuntary collection through the Treasury Department’s offset program, which withholds tax refunds, federal salaries and other benefits from people with past-due debts to the government.
Simultaneously, those in default will likely receive an email within the next two weeks encouraging them to consider repayment options.
After a 30-day notice, the department also will begin garnishing wages for borrowers in default.
Biden oversaw the cancellation of student loans for more than 5 million borrowers. Despite the Supreme Court’s rejection of his signature proposal for broad relief, he waived more than $183.6 billion in student loans through expanded forgiveness programs.
In her statement Monday, McMahon said Biden had gone too far.
The pause was extended under former President Joe Biden, who also sought to give broad forgiveness of student loans, only to be stopped by the courts
Education Department Secretary Linda McMahon banished any hope that students may have harbored that Biden-era forgiveness schemes and pauses would continue in the Trump administration
‘Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,’ she said.
‘American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.’
Borrowers had been bracing for a development since Biden’s latest grace period lapsed in October 2024, resuming payments for tens of millions of Americans.
Even still, this decision has drawn 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, of the Student Borrower Protection Center.
