Topline
The Education Department announced Monday student loan collections will restart in May for loans in default, a move that could impact millions of borrowers and end the years-long period of leniency then went into effect under former President Joe Biden.
The U.S. Department of Education building is seen in Washington, Monday, Nov. 18, 2024.
Key Facts
The department said in a press release Monday collections of student loans that are in default will resume on May 5.
The resumption in collecting defaulted loans will protect “taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education,” according to the release.
Education Secretary Linda McMahon criticized the Biden administration’s student loan policies and said in the statement, “the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear.”
The government has not collected defaulted loans since March 2020, when Trump first halted referring loans to collection during the COVID-19 pandemic.
This story is breaking and will be updated.
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How Many Student Loan Borrowers Are In Default?
The Education Department said Monday there are more than 5 million borrowers who are in default because they haven’t made a payment in at least 360 days, and there are another 4 million borrowers who are in late-stage delinquency, meaning they haven’t paid in 91 to 180 days. The department estimated “almost 25 percent of the federal student loan portfolio will be in default” when those in late-stage delinquency move to default “in a few months.”
Big Number
42.7 million. That’s how many Americans owe money on student loans. That’s about one in six adults, and the country’s student loan portfolio is bigger than $1.6 trillion.
Further Reading
Student loans in default to be referred to debt collection, Education Department says (Associated Press)
