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Donald Trump’s cuts to federal programs and haphazard trade war are hurting Americans’ wallets and 401(k) plans. And now the White House is choosing to heap more financial pain on millions of Americans with its recent announcement that it will restart previously paused debt collection for student loan borrowers who’d fallen into default.
As NBC News reported:
The Education Department said Monday it will be restarting ‘involuntary’ repayment of federal student loans that are in default. The payments were paused during President Donald Trump’s first term in 2020 as a response to the Covid pandemic. ‘Beginning May 5, the department will begin involuntary collection through the Treasury Department’s offset program, which withholds payments from the government — including tax refunds, federal salaries and other benefits — from people with past-due debts to the government,’ the department said in a statement. Wages will be garnished following a 30-day warning, it added.
The Department of Education claims the number of Americans who are currently in default on their student loans (meaning they haven’t made a payment in more than 360 days) is more than 5 million, and it claims another 4 million haven’t made a payment in 91 to 180 days. It’s worth noting that studies have shown Black and Latino students tend to be disproportionately saddled with student loan debt and have a harder time paying it off than their white peers.
Americans’ dire financial straits, particularly in the wake of Trump’s mishandling of the Covid pandemic, was a key reason for the pause on default payments in the first place. But in the years since Trump instituted the pause — even as President Joe Biden was forgiving more than $183 billion in student debt — some Republicans have portrayed student loan borrowers who’ve had their debt forgiven as lazy or grifters.
Back in 2022, the Biden White House mocked Republicans for those distortions by highlighting the numerous GOP lawmakers who took out PPP loans during the pandemic and had all of those loans forgiven. Plenty of businesses got PPP loans during the Trump and Biden administrations despite doing little, if anything, to promote job growth as the loans were intended to do.
By some Republicans’ estimation, business owners are deserving of loan forgiveness, but people who go into debt to earn an education with hopes of securing jobs at those businesses apparently deserve nothing. Such a blatant contradiction exposes the GOP’s disingenuous attacks on student loan borrowers as the class warfare it truly is.
The timing of this debt collection plan is something to watch in the months ahead. Chicago Federal Reserve Chair Austan Goolsbee recently predicted that Trump’s tariffs are likely to cause an economic slump this summer, which could compound the pressure on struggling student loan borrowers. They may now have to worry about the feds potentially garnishing their wages, in addition to making ends meet in a faltering economy.