Government restarts collections on defaulted student loans

Federal money lenders on Monday were scheduled to resume collecting past-due payments on student loans after a five-year pause in collections. It's a simple concept that if one takes a loan, then the loan must be repaid, Education Secretary Linda McMahon wrote Monday. The Department of Education warned borrowers weeks ahead of time to expect guaranty agencies to resume involuntary collection tactics like wage garnishment.

Rep. Nikema Williams, D-Ga., slammed the Trump administration’s resumption of involuntary collections and continued rallying for mass student loan cancellations in a Monday afternoon post. Credit scores for thousands of borrowers will now drop as they already struggle to pay for Trump’s tariffs and price hikes on goods, she wrote.

How were student loan payments somehow not collected for over five years? Student loan repayment stalled during former President Joe Biden’s COVID-19 collections pause, which was extended a number of times. Borrowers also held off on repayment of loans amid continued promises from the Biden administration that taxpayer dollars would be used to pay off student loans en masse, despite the Supreme Court ruling Biden’s plan illegal.

The Biden administration misled borrowers into thinking it had constitutional authority to wipe debt away, McMahon said in the department's initial announcement that collections would resume. Sen. Tom Cotton, R-Ark, also slammed Biden’s promise to cancel student debt in a Monday post, calling it an illegal vote-buying scheme. The former president wanted truck drivers to pay off a rich lawyer’s college loans, Cotton wrote. He also thanked the Trump administration for restoring fiscal responsibility and law.

Dig deeper: Read my previous report about collections resuming for more background on the state of student loans in America.