President Trump is restarting student loan collections for those in default, reversing a COVID-era policy that Trump himself enacted and which was later embraced by President Biden.
The federal government will start collecting on defaulted loans on May 5, ending a five-year pause that started during the pandemic.
After a 30-day warning, the government will start garnishing wages.
“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,” Education Secretary Linda McMahon said.
The Trump administration's reversal will immediately impact the 5 million borrowers in default - but the number is expected to rise to nearly 10 million since only 40% of borrowers are up to date on their payments.
Trump initially paused student loan payments during his first term, at the start of the COVID pandemic, but Biden extended the policy and went further by eliminating debts altogether.
Biden's campaign pledge of sweeping debt forgiveness ran into roadblocks in court, forcing his administration to devise legal workarounds. The initiative was widely condemned by Republicans as a form of political patronage that would be paid for by taxpayers, but Biden proudly touted his efforts to sidestep the law.
“The Supreme Court blocked it,” Biden said. “But that didn’t stop me.”
By the time he left office, Biden had forgiven $175 billion in student loans. His initial, more ambitious program to forgive $20,000 per borrower was blocked by the Supreme Court.
The student loan moratorium technically ended in 2023, but Biden gave borrowers a one-year grace period that lasted through the 2024 election cycle.
While Trump's critics accuse him of being cruel, Education Secretary Linda McMahon says the status quo was unfair to taxpayers - and it did no favors for borrowers who were given false hopes of forgiveness.
“President Biden never had the authority to forgive student loans across the board, as the Supreme Court held in 2023,” McMahon wrote in the Wall Street Journal.
“But for political gain, he dangled the carrot of loan forgiveness in front of young voters, among other things by keeping in place a temporary Covid-era deferment program.”
The reversal is also necessary to put America's fiscal house in order, the administration says. The Education Department noted that nearly one quarter of all loans could soon be in default after years of leniency.
