During Donald Trump’s presidency, payments on student loans were frozen to help millions of Americans when COVID-19 shut down businesses and wiped out jobs, but now a major shock is coming for borrowers,
as the Education Department just announced that federal student loans in default will be collected again starting as soon as next month. Over 5.3 million people could be hit hard, and after Biden’s attempt to cancel loans was blocked by the Supreme Court in 2023, it’s clear that help isn’t coming anytime soon.
The government isn’t playing around. Beginning May 5, they will start automatically pulling overdue payments straight from tax refunds, federal salaries, and even Social Security checks. Borrowers will get barely two weeks’ notice before collections begin, and with less than 40% of student loan holders up to date, millions are walking straight into a financial disaster. Experts are warning this sudden move could trigger a new wave of defaults, hardship, and outrage across the country.
The blame game has already begun. Education Secretary Linda McMahon accused the Biden administration of misleading borrowers and promised to enforce the rules “by the book” moving forward. Meanwhile, advocates like Natalia Abrams are demanding a bailout for student borrowers, just like the government once gave to banks and automakers. As money starts disappearing from paychecks and tax returns, one question hangs in the air: how bad will the fallout really be?