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Student Loan Borrowers Face Debt Collectors After Defaulting

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Student Loan Borrowers Face Debt Collectors After Defaulting

by Andrew Powell
May 5, 2025
in News
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Student Loan Borrowers Face Debt Collectors After Defaulting

WASHINGTON, DC - APRIL 30: Education Secretary Linda McMahon speaks during a Cabinet meeting at the White House on April 30, 2025 in Washington, DC. Trump convened the meeting as reports released today say the U.S. economy contracted 0.3% in the first quarter of 2025, the first negative reading in three years, fueled by a massive surge in imports ahead of the administration's expected tariffs. (Photo by Andrew Harnik/Getty Images)

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As of Monday, millions of student loan borrowers could be facing debt collectors after going into default on their loans during the Biden administration.

According to Fox Business, notices have been sent to borrowers after the Department of Education (DOE) said they will once again begin collecting loans to protect U.S. taxpayers “from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education.”

Secretary of Education Linda McMahon said in a statement that former President Joe Biden and his administration “misled” students.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon said. “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.”

Loan payments were paused in March 2020 due to the COVID-19 pandemic; however, the DOE said its Office of Federal Student Aid (FSA) resume collections on May 5th.

“Today, 42.7 million borrowers owe more than $1.6 trillion in student debt,” the department said. “More than 5 million borrowers have not made a monthly payment in over 360 days and sit in default — many for more than 7 years — and 4 million borrowers are in late-stage delinquency (91-180 days). As a result, there could be almost 10 million borrowers in default in a few months.”

“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 added. “Later this summer, FSA will send required notices beginning administrative wage garnishment.”

While the pause ended in 2023, the Biden administration extended it through to the end of 2024 as part of Biden’s promise to implement loan forgiveness programs. Potential penalties for going into default could include administrative wage garnishment, according to The Wall Street Journal.

“While Congress mandated that student and parent borrowers begin to repay their student loans in October 2023, the Biden-Harris Administration refused to lift the collections pause and kept borrowers in a confusing limbo. The previous Administration failed to process applications for borrowers who applied for income-driven repayment and continued to push misguided ‘on-ramps’ and illegal loan forgiveness schemes to win points with borrowers and mask rising delinquency and default rates,” the Department of Education said, per Fox News.

Tags: Biden administrationDefaultDepartment of EducationDonald TrumpLinda McMahonpoliticsStudent loansTrump administrationU.S. News
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Andrew Powell

Andrew Powell

IJR, Contributor Writer

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