The Trump Administration has officially resumed collection efforts on defaulted federal student loans as of May 5, 2025, marking the end of a nearly five-year pause. This change comes on the heels of a collection hiatus that started in March 2020, as a result of the COVID-19 pandemic. The new decision to restart these collection activities is cause for alarm among borrowers and advocates. They’re most worried about how this will affect older Americans.
U.S. Secretary of Education Linda McMahon emphasized the administration’s stance on student debt, stating, “Borrowers should pay back the debts they take on,” in a video posted on X on April 22, 2025. This feeling mirrors the lack of incoming communication from the administration on enforcement repayment as a priority.
The Education Department’s data tells a clear story. As of Q1 2025, there are 2.9 million borrowers aged 62 or older with federal student loans. The possible consequences for this population are severe. The federal collection powers available to the government are quite draconian, allowing the government to retroactively seize or offset incoming federal tax refunds, wages, and Social Security retirement and disability benefits. In practice, retirees undergo offsets to their benefits only after the wage garnishment and other debt collection efforts have been unsuccessful.
Prior to implementing this new policy, borrowers were given notice 65 days prior. This administrative order gave them advanced notice prior to the garnishment of their federal benefits. Unfortunately, it seems that inaction by key decision-makers has already led to many of the affected borrowers facing financial harm. Mark Kantrowitz, financial aid expert, noted an anomalous implementation period of 30 days’ notice. He noted that this would result in a very sudden shift in the new collection strategy.
The Biden administration focused on extending the same relief measures that had helped pandemic-affected borrowers. They advocated for policies that helped people get back on track. Illustration by Annelies Gentile, courtesy of onebluestarsoldier/Flickr Under the Trump administration, the federal government has increased their collection efforts. This is a return to draconian tactics that prioritize repayment over relief.
As payment collections ramp back up, borrowers should look into deferment or forbearance possibilities. These options allow them to defer their payments for a limited period. A financial advisor stated, “We’re advising clients to request a retroactive forbearance to cover missed payments, and a temporary forbearance until they can get enrolled in an income-driven repayment plan.”
It’s been an alarming jump in borrowers with defaulted loans. In 2017, that number hit a peak of about 1.7 million borrowers in default. Triple in just 9 months, to over 2.9 million in early 2025 – a 71% increase. This trend points to an alarming new era of the student debt crisis—repayment.
Carolina Rodriguez, an advocate for borrowers’ rights, expressed her concerns regarding the impact of wage garnishment on retirees: “Losing a portion of their Social Security benefits to repay student loans could mean not having enough for food, transportation to medical appointments or other basic necessities.”
This would usher in a deeply troubling new chapter in student loan collections under the Trump administration. Indeed, assuming their implementation goes as planned, we do not know how these changes will affect millions of borrowers, particularly older Americans who may have difficulty coping with the financial burden of wage garnishment.
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