Move Comes as Millions of Americans Are Struggling to Navigate Unprecedented Economic Uncertainty and Record Number of Americans With Student Loan Debt Are Behind on Student Loan Bills
April 21, 2025 | WASHINGTON, D.C. — Today, the Trump Administration announced plans to begin subjecting millions of Americans in default to mandatory collections, including wage garnishment, tax refund, and Social Security benefit offsets. According to the Administration’s announcement, starting on May 5, 2025, borrowers will begin receiving collection notices through the U.S. Treasury Offset Program with administrative wage garnishment expected to resume later in the summer.
The decision to resume the governments’ collections machine marks the first time in five years that the federal government will penalize Americans who fall behind on their student loan payments. The announcement also comes as Americans are navigating unprecedented economic uncertainty—struggling to cover the rising costs of everyday goods, dealing with the economic fallout of mass firings of more than 24,000 federal workers all while being unable to access the full suite of affordable repayment options to help better manage their student loans. Today’s announcement referenced a future “robust communication campaign” to assist borrowers, but did not provide any information about what, if any, steps the administration is taking to ensure the student loan system will meet borrowers’ needs and fulfill their statutory and contractual rights.
In response, Student Borrower Protection Center (SBPC) Executive Director Mike Pierce released the following statement:
“For five million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford. Since February, Donald Trump and Linda McMahon have blocked these borrowers’ path out of default and are now feeding them into the maw of the government debt collection machine. This is cruel, unnecessary, and will further fan the flames of economic chaos for working families across this country.”
Background
The decision to resume the government’s collections machinery does not exist in a vacuum. Earlier this year, the Trump Administration chose to block access to affordable student loan payments by removing the Income-Driven Repayment (IDR) and consolidation application and secretly ordered student loan servicers to halt all application processing.
Prior to the Trump Administration’s decision to remove IDR applications and halt application processing, more than 1 million borrowers remained in a backlog waiting for their application to be processed. Only after pressure from a lawsuit filed by SBPC and Berger Montague on behalf of the AFT did the Administration restore the application. To date, the Administration has yet to begin widespread processing of IDR applications which has forced borrowers to remain in economic limbo.
Further Reading
SBPC blog explaining how millions of borrowers are heading towards a default cliff: Millions of Student Loan Borrowers Are Headed Towards A Default Cliff
SBPC press release on Trump Administration initially pulling down IDR applications: Trump Administration Denies Access to Affordable Repayment Plans in Extreme Response to Right-Wing Court Order
Forbes article by Adam Minsky on application processing halt increasing borrowers’ payments: Student Loan Borrowers Are Reporting Huge Spikes In Monthly Payments As Repayment System Buckles
U.S. Senators Wyden and Sanders press release: Wyden, Sanders Blast Trump Administration for Abruptly Freezing All Student Loan Repayment Programs
Letter to Education Secretary Linda McMahon from 25 U.S. Senators led by U.S. Senators Bernie Sanders and Ron Wyden: Re: Trump Administration’s Recent Action To Suspend Access To All Income-Driven Repayment (IDR) Plans
Washington Post article by Danielle Douglas Gabriel on memo to secretly halt servicers’ application processing:It Could Be Months Before Affordable Student Loan Repayment Plans Return
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.