With millions of borrowers at risk and wage garnishments set to begin this summer, women and minority borrowers stand to lose the most as the Trump administration ends five years of student loan collection mercy.
Student loan borrowers who have fallen behind on payments face a harsh new reality starting next month as the Trump administration reinstates collection measures dormant since the pandemic began.
Federal officials confirmed this week that beginning May 5, the government will restart aggressive debt collection tactics against defaulted student loans, including wage garnishment expected to begin by mid-summer.
The policy reversal marks a significant departure from recent years. During the pandemic, borrowers enjoyed payment suspensions, and even after those formally ended in 2023, the previous administration granted a grace period to ease the transition back to repayment.
The Education Department under Secretary Linda McMahon has seen massive cuts both to programs and workforce, with 50% of workers put on administrative leave this year. McMahon has framed the collection decision as fiscal responsibility, emphasizing that taxpayers should no longer bear the burden of unpaid student loans.
It’s estimated that more than 5 million borrowers have defaulted their federal student loans, meaning they have failed to meet the terms of their loan plan (e.g., missed payment). The department said in a statement that the number could reach 10 million in a few months. The Treasury Department will administer to the repayment. Affected borrowers will get notices in the next two weeks..
The impact could be especially pronounced in Iowa, where education data shows that over half of college graduates carry student debt averaging nearly $27,000. Iowa’s average salary is among the lowest in the nation at $49,972, or $24 an hour. Under current interest rates, these graduates face decade-long payment plans with substantial interest costs.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon said in a statement.
Under the Trump administration’s policy, if you’re in default, the government could garnish your wages without a court order, take your tax refund, seize a portion of your Social Security benefits, and damage your credit score.
The decision appears likely to fall hardest on women, particularly women of color, reports The 19th News. Women currently hold about two-thirds of American student debt, with Black women carrying the highest average balances among all demographic groups.
Federal officials plan to begin contacting delinquent borrowers shortly, but critics question whether outreach efforts will be sufficient given recent staffing reductions at the Education Department.
Despite the Trump administration’s hard line, there are still options for borrowers with defaulted loans:
- Loan rehabilitation occurs after a borrower makes nine monthly payments within 20 days of their due dates over 10 consecutive months. These payments range depending on income.
- Borrowers can also consolidate loans into a Direct Consolidation Loan by agreeing to an income-driven repayment plan or making three consecutive payments first.
- For those with the cash on hand, it is possible to pay the full amount of a loan which would immediately resolve default status.
Borrowers seeking guidance can access information through federal student aid websites or contact Iowa-specific resources for assistance navigating their options before collection efforts intensify.
