As President Donald Trump’s reckless tariff policies upend the global economy, the administration has debuted another terrible idea: calling in student loans.
The Department of Education announced that starting next month it will garnish wages from student loan borrowers who defaulted on their debt, something they call “involuntary collection.”
This will put the federal government in the role of a debt collector, and the White House says it will claw back these funds by withholding tax refunds, federal pensions and even wages.
Setting aside the wisdom of this as a policy, it’s particularly ill-timed, given the precarious state of the economy. Put simply, this plan amounts to an anti-stimulus, taking money that would be helping stimulate the economy out of circulation.
It’s crazy that this policy even made it out of a meeting. Fears of a recession are growing. The Federal Reserve warns we’ll likely see higher inflation because of Trump’s trade wars. And the price of eggs is still too high. Now the government wants to withhold money from people who are struggling to stay afloat.
Put yourself in the shoes of a typical small-business owner, already stretched thin by the looming price increases and potential inflation due to the tariffs. They may soon have to decide whether to raise prices and potentially lose customers or look for ways to cut costs, perhaps by letting go of staff. Now their customers with student loans will be even more hard-pressed.
Their bills are rising and now their paycheck will be smaller.
The policy is a double whammy for people who defaulted on their student loans, who we can presume were already not doing well financially. Their bills are rising and now their paycheck will be smaller. This will only put them further in debt, with no relief in sight.
Trump’s “involuntary collection” could even hurt a family’s future by tanking its chances of buying a house or getting approved for a car loan. The administration has even stated this as a threat, with Education Secretary Linda McMahon warning in a Wall Street Journal opinion piece that “borrowers who don’t make payments on time will see their credit scores go down.”
The Trump administration wants you to think people burdened by student debt are a bunch of elites with useless degrees. That couldn’t be further from the truth. Millions of Americans took out loans to go to college because the cost of higher education is ludicrous. In total, a quarter of American adults under 40 have student debt. These graduates didn’t have rich parents to cover the cost of a degree.
Overall, close to 43 million Americans have federal student loan debt, totaling $1.6 trillion. Of those borrowers, more than 5 million are in default on their loans. The Education Department says that number could grow to as many as 10 million over the next few months.
The burden of student loan debt also disproportionately affects Black Americans. According to the Education Data Initiative, Black graduates who racked up federal student loan debt owe an average of $25,000 more in loans than white graduates just four years after earning a degree.
It matters who is in the room when policy decisions are made. When I worked in the Biden administration, it made a difference having people at the table who had a direct connection to the issue. That real-life understanding of living with student debt was key when we worked on creating pathways for debt relief.
Under Trump 2.0, I have to ask, who exactly was in the room when the decision was made to hamstring working-class Americans’ financial security? Did they study what would happen to people who default on their debt because they can’t keep up with rising inflation? These are issues affecting real people. But too many members of Trump’s Cabinet are billionaires, including McMahon, who is estimated to be worth some $3 billion.
There are arguments to be made about what should happen when people default on student loans, but they need to begin with the facts. Let me be clear: No one wants to default on their loans. But in the current economy, some people are forced to choose between feeding their families or paying Uncle Sam. That should hold some sway in this discussion.
The federal government should not ignore the implications of these decisions. A better presidential administration would work to find solutions for the millions of people who racked up debt while getting an education to secure a better future for themselves and their children.
It’s especially rich that this demand is coming from a president who doesn’t always pay his bills and went bankrupt six times. Now that he’s in charge, he’s determined to make life harder for working people who are struggling by demanding they pay up.
For more thought-provoking insights from Symone Sanders-Townsend, Michael Steele and Alicia Menendez, watch “The Weekend” every Saturday and Sunday at 8 a.m. ET on MSNBC.
