Student loan borrowers are panicking as the Trump administration restarts collections to put a final end to their free ride.
Starting today, the federal government will once again collect on defaulted student loans after a five-year pandemic pause.
This bombshell move is set to affect over 5 million borrowers who failed to make payments.
It also signals a return to fiscal responsibility after years of taxpayers shouldering the burden of unpaid education debt.
Education Secretary Linda McMahon made it clear that the era of transferring student debt to hardworking Americans is over.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon stated, emphasizing that those who borrowed money should be responsible for repaying it.
The resumption of collections comes after the Biden administration repeatedly extended the payment pause that began in March 2020.
Joe Biden’s attempt to unilaterally cancel up to $20,000 in student debt was ultimately blocked by the Supreme Court, which recognized his overreach in trying to forgive loans without congressional approval.
The consequences could be significant for those in default, which are people who have missed payments for 270 days or more.
The Treasury Department will use its Offset Program to collect unpaid debt through multiple channels.
These include withholding tax refunds, garnishing up to 15% of federal workers’ disposable income, and even taking portions of Social Security benefits from retirees.
While critics claim the resumption of collections will harm struggling Americans, the reality is that these borrowers agreed to repay the money they received.
Supporters of the move argue that it is unfair to continue pushing the financial burden onto taxpayers who never took out student loans or responsibly paid off their own debt.
The total student debt has ballooned to a staggering $1.6 trillion over the last five years, creating an unsustainable situation that requires action.
For borrowers concerned about their ability to make payments, there are options available.
Income-based repayment plans, deferment, forbearance, consolidation, and the Education Department’s loan rehabilitation program can help those facing genuine hardship without forcing taxpayers to foot the bill.
Borrowers should also be wary of scammers taking advantage of the situation.
Only work with official Department of Education channels or your loan servicer when seeking assistance with your student loans.
The Federal Student Aid’s Default Resolution Group is available to help borrowers explore their options.
The decision to resume collections contrasts with the previous administration’s approach, which created confusion and false hope by promising widespread loan forgiveness that courts determined was illegal.
