The Department of Education announced Monday that it will resume collections on defaulted student loans starting May 5—just as the stock market hits historic lows and inflation continues to climb.
On a call with reporters, officials confirmed that borrowers who don’t pay up could face wage garnishment by summer. Others could be hounded by debt collectors or shoved into income-based repayment plans. The Treasury Department will administer the process through its offset program, and borrowers will be notified within the next two weeks.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said in a statement.
This marks the official end of a pandemic-era pause on collections that began in March 2020. No defaulted federal loans have been referred to collections since, but that ends now—arguably at the worst possible moment.
The economy is in worse shape than it was during the pandemic, thanks in no small part to Trump’s erratic economic policies: self-sabotaging tariffs, nonstop bashing of Federal Reserve Chair Jerome Powell, and a general war on basic stability.
Trump has also repeatedly threatened to dismantle the Education Department, which has made it harder for borrowers to get clear answers, even if they want to pay. Now he’s making sure the agency goes out swinging by garnishing paychecks on the way out the door. It’s not just cruel. It’s deliberate.
“Things are really difficult to understand right now. Things are changing every day,” Kristin McGuire, the executive director for Young Invincibles, which focuses on economic security for young adults, told the Associated Press. “We can’t assume that people are in default because they don’t want to pay their loans. People are in default because they can’t pay their loans and because they don’t know how.”
And of course, every day Americans will pay the price. With grocery bills rising and wages stagnating, the White House has warned that defaulted borrowers could be referred to federal collectors—losing access to aid, wrecking their credit, and facing long-term financial damage.
This isn’t some niche issue. The Education Department says roughly 5.3 million borrowers are already in default, but it expects that number to nearly double. Another four million are in late-stage delinquency, meaning 91 to 180 days behind in paying. Less than 40% of all borrowers are current on their loans.
Trump hasn’t offered borrowers relief—just a bill.
It was former President Joe Biden who fought to cancel up to $20,000 in student debt for anyone who had received a Pell Grant to be able to go to college and bring millions of borrowers back into good standing. While the Supreme Court blocked his broad forgiveness plan, Biden still managed to cancel over $183 billion in debt for more than five million borrowers.
Now, under Trump, the collections are back, and the compassion is gone.
“There will not be any mass loan forgiveness,” McMahon said. She added, “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.”
But the timing couldn’t be worse. Trump’s economic chaos is gutting consumer confidence and stretching household budgets thin. Millions of borrowers are about to get hit with a bill they can’t afford. Miss it, and they could watch their credit sink, their wages shrink, and their financial stability collapse.
“You’ve gotten people out of the habit of repaying now for the better part of five years,” Colleen Campbell, the former head of loan portfolio management at the Education Department, told The New York Times. “For some borrowers, several cohorts of them, you’ve never built the repayment habit at all.”
Trump’s message? Too bad. Pay up—while he burns the economy down around you.