Time - The Department of Education announced Monday that it will resume collection on defaulted student loans starting Monday, May 5.
Student loan borrowers who defaulted on their loans had not made payments towards their balances since March 2020, when the COVID-19 pandemic paused such collection efforts. But borrowers should not expect to receive any exemptions from payments under the new Trump Administration, which estimates that some 10 million, or 1 in 4 borrowers, could be in default on their loans in the next few months.
The act marks a policy shift from the Biden Administration, whose efforts to grant student loan forgiveness were struck down in the courts time and time again. Most recently, lawsuits targeted the Saving on a Valuable Education (SAVE) income-driven repayment plan, through which some low-income borrowers made $0 monthly payments towards their student loans.
The federal government’s student loan portfolio has amassed to some $1.6 trillion, and currently 40% of borrowers are in repayment, White House Press Secretary Karoline Leavitt told reporters on Tuesday. “America is $36 trillion in debt. We must get our fiscal house in order and restore common sense to our country. If you take out a loan, you have to pay it back,” she said.
MSNBC - It was Trump himself who first paused collection on student loans during the beginning of the Covid-19 pandemic. When President Joe Biden took office, after campaigning on student loan forgiveness, he extended the pause multiple times until it finally lapsed in September 2023. His administration then instituted a 12-month “on-ramp” for borrowers to begin their repayments. Since that relief period ended, according to an estimate last month from the Federal Reserve Bank of New York, around 9.7 million borrowers became past due on their bills.
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