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debt collective
Trump Admin Will Garnish Struggling Borrowers' Wages as Student Loan Payments Resume
"This is just cruel and doesn't have to happen," said the Debt Collective.
Apr 21, 2025
The Trump administration on Monday announced that it will resume involuntary collection measures against defaulted federal student loan recipients, including garnishing wages, tax refunds, and Social Security benefits and "other actions to help borrowers get back into repayment," as the U.S. Department of Education euphemistically said.
"Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education," DOE said in a statement notifying the public that collections will resume May 5. "This initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default."
The DOE said the U.S. Treasury Offset Program will administer borrower garnishments, which are expected to resume this summer.
DOE continued:
While Congress mandated that student and parent borrowers begin to repay their student loans in October 2023, the Biden-Harris administration refused to lift the collections pause and kept borrowers in a confusing limbo. The previous administration failed to process applications for borrowers who applied for income-driven repayment and continued to push misguided "on-ramps" and illegal loan forgiveness schemes to win points with borrowers and mask rising delinquency and default rates.
"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," billionaire U.S. Education Secretary Linda McMahon said on Monday.
The repayment resumption is part of the Trump administration's three-pronged, $1.6 trillion overhaul of the federal student loan system. In addition to moving to collect on defaulted loans, the administration is looking to end former President Joe Biden's Saving on a Valuable Education (SAVE) plan, an income-driven repayment program currently blocked by a federal appellate court. President Donald Trump also signed an executive order narrowing eligibility for the Public Service Loan Forgiveness program.
Last month, the American Federation of Teachers led a lawsuit against the Trump administration after the DOE cut off access to income-driven repayment plan applications and secretly ordered student loan services to stop accepting and processing such applications.
The government has not collected on defaulted student loans since March 2020, when the first Trump administration paused repayments due to the burgeoning Covid-19 pandemic. The reprieve, which was subsequently extended several times, was set to end in September 2023. Efforts by the Biden administration to forgive some or all loan debt for more than 45 million student borrowers were thwarted by the right-wing U.S. Supreme Court in 2023.
"The Biden administration misled borrowers: The executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear," said McMahon. "Hundreds of billions have already been transferred to taxpayers."
"Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation's economic outlook," she added.
As McMahon and the Trump administration work toward ending the DOE—a key goal of Project 2025, the Heritage Foundation-led plan to eviscerate the federal government—Trump has ordered the administration of federal student loans to be transferred to the Small Business Administration (SBA), which was headed by McMahon during Trump's first term.
Approximately 5.6 million student borrowers were in default at the end of 2024. The DOE warns that "there could be almost 10 million borrowers in default in a few months" after repayments resume. That's roughly 25% of the current student loan portfolio. Failure to make timely student loan repayments results in lower credit scores for borrowers, who in turn generate less economic activity—a domino effect with implications for the entire slowing U.S. economy.
"They bailed out banks, corporations, and airlines. But when it comes to student debt? Suddenly it's 'too expensive.'"
"Many of the households required to resume paying on their student loans are also struggling with credit card debt at near-record interest rates and high-rate mortgages they thought they would be able to refinance into a lower rate, but haven't," explained Moody's Analytics chief economist Mark Zandi in a Monday interview with The New York Times.
Some critics slammed the Trump administration for resuming student loan repayments amid an affordability and housing crisis during which a record number of people are unhoused.
"Parents delaying retirement. Grads postponing families. This isn't 45 million separate problems, it's one national crisis," the Student Debt Crisis Center (SDCC) said on social media. "They bailed out banks, corporations, and airlines. But when it comes to student debt? Suddenly it's 'too expensive.'"
SDCC executive director Mike Pierce said that "federal law gives borrowers a way out of default and the right to make loan payments they can afford. Since February, Donald Trump and Linda McMahon have blocked these borrowers' path out of default and are now feeding them into the maw of the government debt collection machine."
"This is cruel, unnecessary, and will further fan the flames of economic chaos for working families across this country," Pierce added.
Tuition-free college would help make America great. Those who need loans to attend college come from working class families, the elites don’t need loans. 40% of student debt holders don’t hold a degree. This will hurt the working class.
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— Nina Turner (@ninaturner.bsky.social) April 21, 2025 at 2:07 PM
Others offered solutions enjoyed by people in other countries, including simply not collecting the debt and making colleges and universities tuition-free—even if their chances of implementation under what many leftists call U.S. "late-stage capitalism" are next to nil.
"If the Trump/Musk administration really wanted 'government efficiency,' then they wouldn't be collecting on debts people cannot and will not pay,"
said the Debt Collective, a debtors' union, referring to Elon Musk, who heads the Department of Government Efficiency. "They would just cancel it and boost the economy."
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Maine Nonprofit Cancels $1.9 Million in Medical Debt for 1,500 People
"This is just a drop in the bucket," a campaigner said. "Now, it's up to our lawmakers to make healthcare affordable for everyone in our state and to eliminate medical debt."
Oct 24, 2024
Mainers For Working Families, an advocacy group, announced on Thursday that it had partnered with a larger nonprofit to relieve $1.85 million worth of medical debt for 1,508 low-income people who live in Maine.
MFWF furnished a donation of $12,740 to Undue Medical Debt, a 501(c)(3) group formed by former collections executives, which bought the $1.85 million in debts; such debt is sold at pennies on the dollar.
The recipients, spread all over Maine, were people who live four times below the Federal Poverty Level or for whom medical debt totals more than 5% of their annual income.
"We can't turn back the clock for these people, but we had to do something," Evan LeBrun, MFWF's executive director, said in a statement.
"This is just a drop in the bucket," he added. "Now, it's up to our lawmakers to make healthcare affordable for everyone in our state and to eliminate medical debt."
BREAKING: Mainers for Working Families is partnering with @unduemeddebt to purchase and forgive $1.8 million in medical debt for over 1,500 Mainers across the state. pic.twitter.com/gkf4QELoiA
— Mainers For Working Families (@ForMainers) October 24, 2024
MFWF has worked on healthcare affordability issues since 2021 and medical debt since last year, a representative told Common Dreams. The group recently released a series of videos on the topic based on interviews conducted around Maine.
Undue Medical Debt formed in 2014 following inspiration from debt cancellation projects undertaken by Occupy Wall Street participants, including activist-intellectuals such as Astra Taylor and David Graeber. The nonprofit, which drew donor attention after it was featured by comedian John Oliver on his HBO show in 2016, has now canceled nearly $15 billion in medical debt, according to its website. Oliver himself made a contribution to the group, which was previously known as R.I.P. Medical Debt.
Nationwide, nearly 100 million people are dealing with unpaid medical bills, according to federal data.
The push for change in the field of medical debt has yielded a series of small victories. Last year, the three major consumer report agencies—Equifax, Experian, and TransUnion—stopped including medical debts below $500 on their credit reports, according to the Consumer Financial Protection Bureau. In June, the CFPB moved to ban all medical debt from credit reports, drawing praise from progressives such as Sen. Bernie Sanders (I-Vt.).
Vice President Kamala Harris, the Democratic presidential nominee, has pushed medical debt cancellation in her current role and pledged, as part of her economic agenda, to work with states to states to cancel more debt if she wins in November.
A working paper published by the National Bureau of Economic Research in April called into question the premise of Undue's work, finding that recipients of debt relief had no better credit scores or mental health than a control group. A co-author said the results had "disappointed" the researchers.
However, research has shown strong benefits to other forms of debt relief, and a 2023 survey conducted by Undue and other groups did show that medical debt negatively affected mental health for most people and caused 42% to delay further medical care.
Medical debt disproportionately affects people who are poor, Black, or disabled, according to Peterson-KFF Health System Tracker. About 3 million Americans have more than $10,000 in medical debt.
One is a woman named Kim, a resident of Old Town, Maine, whom MFWF interviewed in a recent video. She lives off of $26,200 per year and has roughly $2 million in debt, thanks to her fight with Addison's disease, a chronic endocrine disorder.
"I am really hoping that someone sees what is actually happening out there," she said. "God, I hope so."
Efforts to address the issue at the Maine state level have achieved mixed success. A modest reform bill that prevents debt accrual on medical debt did pass in Augusta in April.
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'Death Should Not Be the Only Relief': Seniors Lead Their First Action Against Student Debt
"This week for the first time in history, older student debtors have gone to Washington to demand our student loan debts get canceled in our lifetime, not at our funerals," one older debtor said.
Sep 13, 2024
Carrying mock tombstones reading, "Death is not a relief plan" and "Stop burying us in debt," a group of older debtors held the first-ever senior-led mass action for student debt relief outside the White House on Thursday.
Borrowers over 50 are the fastest-growing demographic of student debtors, and some of them are calling on the Biden-Harris administration to take advantage of federal regulations that empower the Department of Education to cancel debt based on age.
"The only comprehensive student debt relief plan that the federal government offers right now is death," Debt Collective creative media strategist Maddie Clifford said in front of the White House. "That is the only way people can escape from these student loan payments."
The participants in the vigil, who collectively owe more than $1 million in student loans and include members of the Debt Collective's "50 Over 50" caucus, shared their stories as they demanded relief.
"I would have never imagined approaching my 60th birthday with $211,388 worth of student debt," said Renita Walker, a Debt Collective member from Sandy Springs, Georgia. "The idea itself is paralyzing. It is the realization that I will probably work myself to death, literally."
Walker took out loans both to continue her education as a single mother after her husband died and to help her two children pay for school. The loan payments ballooned to the point that she was paying $1,800 a month until she took money out of her 401(k) to bring the payment down to around $1,300 a month, still more than her mortgage.
"I just want to say like many of the people here standing behind me, this was not something we asked for," Walker said. "Unfortunately, the system is broken and we have to live with the results of that."
"For decades, millions of older debtors have crouched in shame, imagining ourselves as failures when in reality the system has failed us. But we will no longer be duped into suffering alone."
Fellow Debt-Collective member and Georgia resident Athena Blue, a 67-year-old retired nurse, also took out Parent Plus loans to pay for her children's education.
Blue spoke of overcoming the shame of indebtedness by learning the history of how former U.S. President Ronald Reagan had pushed for the current student loan system in order to make it more difficult for working-class Americans to attend university as a backlash to campus protests in the 1960s and 70s.
"The debt that I'm in isn't my fault," Blue said. "It was created purposely by people like former President Ronald Reagan who believed that only certain people should have the right to higher education."
Blue said she had managed to pay off all of her interest on her loan in 2020 when it was transferred to another provider and she had to start over.
"This burden of a loan threatens my retirement," Blue said, "So how can you, Congress, the Department of Education, and the White House allow this to continue? How can you allow seniors to be subject to predators like this? Have you no moral compass? No shame?"
Debt Collective member Alicia Barnes, who joined the Navy to avoid taking on any more debt, said she had discovered in a meeting with the Department of Education that day that her service provider had illegally placed her debt into default while she was deployed.
"Instead of including a Suicide Hotline for veterans on every piece of communication we receive, the causes of these tragedies should be met with real solutions including absolving some of the debt we accrued during our service because of this compounded interest and illegal activity by these debt collectors," Barnes said.
Every speaker at Thursday's vigil was a woman, as are the majority of student loan debtors. A disproportionate number of student debtors are Black women in particular.
Many of the speakers went into debt to pursue careers in public service fields like education, pastoral counseling, and social work.
"We are caring human beings that wanted to help out the world," said Debt Collective member Mary Donahue of Maryland. "We just need a little help."
The Debt Collective insists that "death should not be the only relief plan for their old, unpayable student loans."
"Decades of broken student relief programs, corrupt loan services, and government neglect have meant that millions of older Americans dragged decadesold student debts into their retirement," said Gail Gardner, who is 77 years old and owes $549,497.20. "Absent swift, bold policy change, and clear political leadership, this crisis will only deepen. The debtors will get older. The debts will get bigger."
That is why she said she had joined with other older debtors to "demand the White House and the Department of Education finally take responsibility for clearing the student debts burdening myself and millions of older Americans."
Both Gardner and Clifford pointed out that discharging debts based on age was something that the Biden-Harris administration could do without running afoul of right-wing attempts to block President Joe Biden's other attempts at student debt relief.
"We are urging the Biden Harris administration to work as fast and as hard as Republicans are working to keep us in debt to free borrowers from these loans, and they can do it today," Clifford said.
Gardner concluded: "For decades, millions of older debtors have crouched in shame, imagining ourselves as failures when in reality the system has failed us. But we will no longer be duped into suffering alone. This week for the first time in history, older student debtors have gone to Washington to demand our student loan debts get canceled in our lifetime, not at our funerals. We can't afford to wait."
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