Trump Administration To Restart Collections on Defaulted Student Loans

On April 21, the Department of Education announced that it would resume collections on defaulted federal student loans, making a clear break from student loan policy under President Joe Biden, who consistently worked to forgive or pause federal student loan payments even as he faced legal defeat.

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Secretary of Education Linda McMahon said in a press release. "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."

The Trump administration has already taken several steps to reverse Biden-era student loan policy. Last month, the Education Department took down applications for a Biden administration income-driven repayment plan that had been halted in federal court. Soon after, the department replaced it with a revised, significantly less generous plan. Last month, Trump signed an executive order preventing borrowers who work at ideologically disfavored employers from being eligible for public service loan forgiveness, such as those "aiding or abetting violations of…Federal immigration laws" or providing child gender transitions.

The Biden administration, on the other hand, was marked by a significant—and ultimately failed—effort to reshape federal student loan policy. The most well-known plan in this effort was Biden's attempt to forgive up to $20,000 in federal student loans per borrower, though that plan was swiftly stopped by federal judges—and, later, the Supreme Court—who ruled that the Education Department simply didn't have the power to spend billions of taxpayer dollars on loan forgiveness. Biden's plans to enact significantly more generous repayment programs were also largely halted by courts.

While the Trump administration started a pause on federal student loan payments in 2020, the Biden administration continued it for over three years. In 2023, a working paper found that the pause had actually left the average federal borrower with more, not less, debt. According to the Education Department's press release, only 38 percent of student loan borrowers are even up to date on their payments.

The Trump administration's move to restart student loan collections marks a definitive end to this period of illegal, expensive, and ultimately ineffective attempts to forgive and reduce federal student loan payments. However, permanent change can only come if the federal student loan program, which drives up the cost of college and often encourages individuals to take on debt they are unlikely to repay, is retired for good.

"Student and parent borrowers—not taxpayers—must repay their student loans," reads the press release. "There will not be any mass loan forgiveness. Together, these actions will move the federal student loan portfolio back into repayment, which benefits borrowers and taxpayers alike."

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