Trump admin. to withhold defaulted student loan borrowers' tax refunds and wages: VIDEO
White House Press Secretary Karoline Leavitt warned that borrowers who fail to pay their loans will face involuntary collections including garnishments against tax refunds and wages.
Nearly 43 million borrowers owe more than $1.6 trillion in student debt, according to the department.
The U.S. Department of Education will resume collections of defaulted federal student loans on May 5 after a five-year freeze.
“The government can and will collect defaulted federal student loan debt by withholding money from borrowers’ tax refunds, federal pensions, and even their wages,” Press Secretary Karoline Leavitt said during a White House press briefing on April 22.
.@PressSec: “No student loan has been referred to collection since March of 2020. That comes to an end. On May 5th, the @usedgov will resume involuntary collections for borrowers with defaulted federal student loans.” pic.twitter.com/hpZOtVWG1U
— Rapid Response 47 (@RapidResponse47) April 22, 2025
More than 5 million borrowers will face collections on defaulted student loans.
A loan is in “default” when the borrower has failed to make a monthly payment in over 360 days. At this stage, the loan becomes eligible for mandatory collections.
An additional 4 million borrowers are in “late-stage delinquency,” meaning they could default in the coming months and face collections, according to the Department of Education.
“Student loan borrowers need clarity, and we’re finally giving it to them…If you take out a loan, you must pay it back” Leavitt added.
Nearly 43 million borrowers owe more than $1.6 trillion in student debt, according to the department.
“This is unsustainable, unfair, and a huge liability for American taxpayers,” Leavitt remarked.
The student loan repayment program will be led by the Dept. of Education in collaboration with the Dept. of Treasury.
The Dept. of Education’s Office of Federal Student Aid (FSA) will communicate directly with impacted borrowers in the coming weeks.
The restart of student loan collections will be “paired” with a communications “outreach campaign” through emails and social media “to ensure borrowers understand how to return to repayment or get out of default,” according to the Department of Education.
Borrowers will receive emails in the next two weeks informing them of the situation and encouraging them to “make a monthly payment, join an income-driven repayment plan, or sign up for loan rehabilitation.”
Borrowers who miss payments and become delinquent will be reported to national credit bureaus, which can damage their credit scores and make it difficult “to obtain credit cards, home or car loans, or other forms of consumer credit,” according to Federal Student Aid (FSA).
The FSA also cautions that borrowers in default may encounter further repercussions, such as challenges in securing insurance, utilities, a mobile phone plan, or approval for renting an apartment.
The Department of Education has not collected student loans since March 2020.
Campus Reform previously reported the Biden-Harris administration’s initiatives aimed at canceling student loan debt.
The administration sought to eliminate $475 billion in student loans but faced a swath of legal challenges.
“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers,” said U.S. Secretary of Education Linda McMahon in the press release.
Campus Reform has contacted the U.S. Department of Education for comment. This article will be updated accordingly.
