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Posted on 05/05/2025 5:45:42 AM PDT by thegagline
The U.S. Department of Education is set to restart collection efforts on defaulted student loans on Monday — putting millions of borrowers at risk of wage garnishment and other consequences.
The federal government has extraordinary collection powers on its student loans and it can seize borrowers’ tax refunds, paychecks and Social Security retirement and disability benefits.
More than 42 million Americans hold student loans, and collectively, outstanding federal education debt exceeds $1.6 trillion. More than 5 million borrowers are currently in default, and that total could swell to roughly 10 million borrowers within a few months, according to the Trump administration.
The Trump administration has been critical of former President Joe Biden’s student loan relief efforts, questioning the logic of directing financial resources at those who’ve benefited from a college degree.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon in a statement.
Collection activity on federal student loans has mostly been paused for half a decade. During that period, there have been sweeping changes and disruptions to the lending system. ***
In recent months, the Trump administration has eliminated the forgiveness provision from some student loan repayment plans. *** Restarting collections while the federal student loan system is facing so much uncertainty “will further fan the flames of economic chaos for working families across this country,” said Mike Pierce, the executive director of the Student Borrower Protection Center.
In addition to garnished paychecks and benefits, the millions of borrowers who are already late on their payments may see their credit scores tank by as much as 129 points as the Education Department ramps up collection activity, VantageScore recently wrote.
***
(Excerpt) Read more at cnbc.com ...
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It’s about time these freeloaders pay up.
What will the consequences be for refusal?
I can’t wait until the dummass kids figure out that all the stress and pain attendant to repaying their student loans benefits pinhead professors who don’t know how to tie their shoes.
Since most of them vote for democrats screw them.
I’d really like to see more about how this is all playing out, but from a source that isn’t part of the left wing media.
I’ve a friend that has a loan and she has been paying on it for years, but generally paying only what is required - and that requirement has changed many times depending on who’s in office. She’s quite unsure as to how this is going to unfold.
Having a rogue administration like Biden trying to “forgive” (which means make other people pay for) loans didn’t help because it was a false promise. The only entity that should act as a co-signer to any of these student loans is the universities that are giving out useless degrees.
“”The federal government has extraordinary collection powers on its student loans and it can seize borrowers’ tax refunds, paychecks and Social Security retirement and disability benefits.””
Surely these aren’t the student loans that Biden forgave...Someone old enough to draw SS benefits STILL owes on a student loan?
I believe this was a landmine planted by the Dems to go off during Trump’s term if he were elected, and affect voting in 2026. If Kamala had one, the payment holiday would have been extended, especially for those hired in some capacity by the goverment (including indirect hires, like teachers).
Actions certainly have consequences, but I’ve been think of a couple of aspects that should be considered. I know that many of these won’t be that popular on this forum, and I agree, but some kind of out-of-the-box thinking needs to happen and unfortunately, I don’t see current politicians wanting to upset the status quo, which is sad:
Political: we are less than two years from an election that will once again determine who controls the House. If Democrats win then Trump essentially becomes a lame duck for the last two years of his presidency — you just know they will try to impeach him again if for no other reason than to stop regular business from occurring. Historically, the trend doesn’t favor Republicans. Being heavy handed and threatening student loan borrowers now could backfire politically. You just know the left will push forgiveness policies everywhere and historically, it has a good chance of working.
Forgiveness: We all know that due to the Government taking student loans onto themselves they perpetuated the environment that colleges could just jack up the price and students have no way to discharge the debt. Unless this issue is solved forgiving loans is just a temporary fix to the problem. That the public school system — likely with encouragement from the Federal Dept. of Education has encouraged this practice of pushing students into the college pipeline whether or not it makes economic sense has contributed to the problem. Yes the kids took out the loans, but that wasn’t completely done in a vacuum.
There is no way a solution will be fair for everyone, but my proposal is to consider a few or all of the following. Other members of this forum may have some thoughtful criticism or other ideas. Many or all of these might be unworkable in the current climate:
1. Get the government out of the student loan business — they can still award grants — and return those functions to the private sector.
2. Encourage the private sector to establish a risk ranking based on expected degree return-on-investment and the particular college to determine how to fund college. Colleges who fail their graduates may be forced to pay a certain percentage of student loan costs in the calendar year they get a low ranking. Essentially create something like a credit score, but for colleges and the degrees they offer so students can shop for the best return on investment.
3. Establish block grants to encourage states to rein in public universities and have them cut out the fat and focus on educating students with the goal to reduce tuition and costs significantly to make both 4 year public universities and community college more accessible. Cover 100% (tuition, transportation, books, fees) of high school students who substitute a college level course in place of a high school course. This will get the motivated kids out of the clutches of the public school sooner.
3. Recalculate all student loans, current and past to be principal + 1% (for nominal servicing) to get rid of the usurious charges that hamper our citizens who want to get ahead. Allow for financing for a 20-40 year period. While relief is needed, people should still be responsible for the principal.
4. For those who diligently paid off their loans, allow them to deduct the difference in interest payments after their loans have been retroactively recalculated over 10 years with no marriage penalty for spouses who have already paid off their loans.
5. For those who went into the trades and decided against college, permit them to deduct 5 years prior and 5 years of future the costs of training, tools, uniforms, and supplies purchased in service of their career.
6. Companies should be given generous deductions for subsidizing tuition and training for hires, but the priority has to be US citizens.
Considering the Federal Government blows billions (even trillions) on foreign wars and waste, it seems there should be a way to solve this problem. It might be an opportunity to have a new “Contract for America” like that which broke Democrat control over the house back in ‘94.
If Republicans show no spine, have no unity, and don’t have coherent policies, than historically the incumbent party will be hit hard in the next off-year election and that will gridlock a lot of good the Trump administration could do.
I’m not optimistic though, I think there’s still a lot of uni-party that is biding their time for Trump to go away forever before everything goes back to business as usual.
The story says what the consequences are. Garnishments.
Excellent ideas. Which is why, Congress will never consider them
Sadly, I think you’re right.
Where can you market these outstanding ideas?
X to Musk?
American Greatness?
Any other ideas how to get them to the correct people?
way way way way past time.
My kid did two things right. First, he majored in a career path that has many available positions and pays incredibly well. He was earning more than me two years after graduating.
Second, he lived very cheaply while paying off his loans.
Well, he’s just a cheapskate. He rented a house with several friends for five years until he moved into his own place.
He drove a beater for a year till his loan was paid off. (Yep, all student loans paid in one year) Then he bought a nicer SUV for cash.
The nasty secret they never ever talk about is people who take out massive college loans and never graduate yet still owe the money.
They really start off their adult lives behind.
We need more Mike Rowe’s who promote the value of trades.
Biden didn’t have the power to cancel the loans.
They should get Student Loans from the Real World not the Fantasy Government World
I paid all of mine student loans off quicker than they had to be. Made it a priority to get that debt off my back.
Take it out of any government benefits they get! That’s what they do every month to my SS checks to pay interest of $10,000 from emergency catastrophy funds they sent to my bank and 3 years later decided it was a loan. I wrote them a check for that $25,000 but they still attach every SS check. I never, ever signed up for a $25,000 LOAN! NEVER received any documents!
So did I.
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