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us department of education
'Shameful': Trump Threatens to Redirect Student Loan Borrowers to Most Expensive Repayment Plans
More than 7 million borrowers booted from a Biden-era loan forgiveness program will have to quickly switch to a new plan using a system that's been backed up for months.
Mar 27, 2026
After axing a Biden-era student loan repayment program, the Trump administration is threatening to kick its millions of mostly low-income beneficiaries onto the government's most expensive plan unless they switch to a new one quickly.
The Washington Post reported on Friday that the Department of Education was beginning to email the more than 7 million people enrolled in the Saving on a Valuable Education (SAVE) program, telling them they needed to change their plan within the next 90 days.
Around 4.5 million of those borrowers earn incomes between 150% and 225%, allowing them to qualify for zero-dollar monthly payments under SAVE, which the Trump administration effectively killed in December after settling with Republican states who'd brought lawsuits against the program under former President Joe Biden.
Anonymous officials told The Post that those who do not switch plans within three months of receiving the email will automatically be re-enrolled in the Standard Plan. Unlike SAVE, which is income-based, the Standard plan has borrowers pay a fixed rate over 10 years.
Standard typically carries the highest monthly payments, and those transitioning to it from SAVE could pay more than $300 extra per month in some cases, with the poorest borrowers seeing the sharpest increases.
While 90 days may seem like plenty of time to switch to a less expensive repayment plan, it's not nearly that simple.
Due to the large exodus of borrowers, the Department of Education has struggled to process all the forms, processing only about 250,000 per month. Many borrowers who have tried to transition have found themselves waiting months for a reply.
To make matters more confusing, many of these borrowers will have to switch programs again soon, since all but one repayment program will be dissolved on July 1, 2028 as a result of last year's Republican budget law. The remaining plan will also be income-driven, though it is still expected to cost borrowers more each month.
According to a report released last month by the Century Foundation and Protect Borrowers, two groups that support loan forgiveness, nearly 9 million student loan borrowers are in default. During Trump's first year back in office, the student loan delinquency rate jumped from roughly zero to 25%, which it called "precedent-shattering."
"Much of the rise in delinquencies can be linked to the Trump administration’s actions aimed at increasing student loan payments," the report said. “The US Department of Education blocked borrowers from accessing more affordable payments through income-driven plans, having ordered a stoppage in application processing for three months and mass-denying 328,000 applications in August 2025. As of December 31, 2025, a warehouse’s worth of 734,000 applications sat unprocessed.”
Being in default has major ramifications for borrowers' finances. Those with delinquent loans saw their credit scores decrease by an average of 57 points during the first three quarters of 2025, dragging around 2 million of them into "subprime" territory, which forces them to pay thousands of dollars more for auto and personal loans and makes them more likely to have difficulty finding housing and employment.
The report estimated that if those booted from SAVE defaulted at the same rate as other borrowers, the number of student loan borrowers in distress could rise as high as 17 million.
According to Protect Borrowers, the typical family will pay more than $3,000 per year in additional costs as a result of the end of SAVE.
The end of SAVE comes as oil shocks caused by Trump's war in Iran have spiked gas prices and threaten to raise them throughout the economy, adding to the already elevated costs of food, housing, and transportation resulting from the president's aggressive tariff regime.
"In the middle of an affordability crisis driven by Donald Trump," said Sen. Elizabeth Warren (D-Mass.), "Trump is killing a plan that lowers student loan costs. It's shameful."
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Facing Backlash, McMahon Pauses 'Reckless' Plan to Garnish Wages of Student Borrowers
Advocates warned wage garnishment "would have risked pushing nearly 9 million defaulted borrowers even further into debt."
Jan 16, 2026
Billionaire US Education Secretary Linda McMahon has temporarily suspended the Trump administration's plan to resume garnishing the wages of defaulted student loan borrowers, a reversal that came after advocates warned the pay seizures would have had devastating economic consequences for people across the country amid a worsening cost-of-living crisis.
McMahon, who is actively working to dismantle her department from within, told reporters earlier this week that wage garnishment efforts have "been put on pause for a bit," without providing specifics. The Trump administration, which last summer ended a pause on student loan repayments that had been in place since the start of the Covid-19 pandemic, was reportedly set to begin notifying defaulted borrowers of plans to withhold a portion of their wages last week.
Aissa Canchola Bañez, policy director at the advocacy group Protect Borrowers, said in a statement Friday that "after months of pressure and countless horror stories from borrowers, the Trump administration says it has abandoned plans to snatch working people’s hard-earned money directly from their paychecks simply for falling behind on their student loans."
"Amidst the growing affordability crisis, the administration’s plans would have been economically reckless and would have risked pushing nearly 9 million defaulted borrowers even further into debt," Canchola Bañez added. "Earlier this month, a coalition of partners sent an urgent letter to ED urging them to do just this. We are pleased to see they have heeded our calls.”
That letter—sent on January 7 by Protect Borrowers, the American Federation of Teachers, Debt Collective, and other groups—called the administration's earlier decision to resume wage garnishment "calloused and unnecessary," warning that it came at a time when "struggling borrowers have been forced to wait amidst a nearly 1 million application backlog to enroll in an Income-Driven Repayment (IDR) plan, and as mass layoffs at the department have made it even harder for borrowers to get help with their student loans or if they are experiencing issues with their student loan servicer."
According to an analysis by Protect Borrowers, 3.6 million new student loan borrowers fell into default during the first year of President Donald Trump's second term in the White House. That's one new default every nine seconds.
"Nearly two-thirds of the borrowers who defaulted during the Trump administration—more than 2.6 million people—live in states that President Trump won in the 2024 election," the analysis found.
Under federal law, the Education Department can withhold up to 15% of a borrower's after-tax income to pay down defaulted debt. The Trump administration has already begun seizing income tax refunds from student borrowers in default.
The National Consumer Law Center (NCLC) noted in a Thursday blog post that "if you have received a notice of proposed garnishment, there are steps you can take to object to the garnishment notice and request a hearing, which is typically conducted through a written review of your objections."
"You must act quickly to avoid a potential garnishment order from being sent to your employer," the group stressed.
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'Cruel, Unnecessary, and Irresponsible': Trump Admin to Resume Garnishing Wages of Student Borrowers
One group noted "the irony of a billionaire being in charge of collecting pennies from debtors."
Dec 23, 2025
The US Education Department confirmed Monday that, starting next month, it will resume seizing the pay of student loan borrowers in default as the Trump administration wages a broader war on debt relief and cancellation efforts.
The department, led by billionaire Linda McMahon—who is working to gut the agency from the inside—told the Washington Post that "it will notify about 1,000 defaulted borrowers of plans to withhold a portion of their wages to pay down their past-due debt," beginning the week of January 7, 2026.
"After that, the department said, notices will be sent to larger numbers of borrowers each month," the Post reported. "There were about 5.3 million borrowers who had not made a payment on their federal student loans for at least 360 days as of June 30, according to the latest available data from the Education Department. Many of them were in default before the federal government stopped collecting defaulted loans because of the pandemic nearly six years ago."
Persis Yu, deputy executive director and managing counsel of the advocacy group Protect Borrowers, said in a statement Tuesday that "at a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration's decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible."
"As millions of borrowers sit on the precipice of default, this administration is using its self-inflicted limited resources to seize borrowers' wages instead of defending borrowers' right to affordable payments," said Yu. "There are still nearly a million unprocessed Income-Driven Repayment applications, and this administration has admitted to denying en masse borrowers who applied and requested the US Department of Education’s help in accessing the most affordable payment option."
“Finally, during the last Trump administration, hundreds of thousands had their wages improperly taken at the peak of the pandemic because the US Department of Education was unable to control this tool," Yu added. "It is irresponsible to turn on a debt collection tool that the administration cannot turn off."
In May, the Trump administration ended a pause on student loan repayments that had been in place since the onset of the Covid-19 pandemic in 2020.
The administration has also attacked student debt relief efforts launched under former President Joe Biden. Earlier this month, the Trump Education Department cut a deal to effectively end the Saving on a Valuable Education (SAVE) plan, jacking up monthly payments for millions of borrowers enrolled in the Biden-era program.
"While millions of student loan borrowers struggle amidst the worsening affordability crisis—as the rising costs of groceries, utilities and healthcare continue to bury families in debt—billionaire Education Secretary Linda McMahon chose to strike a backroom deal with a right-wing state attorney general and strip borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head," Yu said in a statement after the deal was announced.
"The real story here," Yu added, "is the unrelenting, right-wing push to jack up costs on working people with student debt."
"The federal government also wields vast extrajudicial powers to collect student debt, including garnishing wages and seizing Social Security payments."
The Education Department is legally allowed to withhold up to 15% of a borrower's after-tax income to pay down defaulted debt. As the Post noted, the Trump administration has already resumed seizing tax refunds and Social Security benefits student loan borrowers in default.
The Debt Collective, the first debtors' union in the US, noted "the irony of a billionaire being in charge of collecting pennies from debtors."
"The Department of Education pushes debtors toward payment to get out of default," the group added. "They don’t want you to know that you have other options. These include traditional repayment options, nonpayment options, and lesser-known options."
The Trump administration's decision to resume garnishing borrowers' wages comes as advocates are warning of a "default cliff" as borrowers struggle to afford basic necessities, leaving them unable to keep up with loan repayments. A Data for Progress survey released earlier this month found that more than 40% of borrowers report making tradeoffs between covering basic needs and staying current on student loan debt payments."
"Student loan default comes with severe and punitive consequences," Michele Zampini, associate vice president of federal policy and advocacy at the Institute for College Access and Success, wrote in a blog post earlier this month.
"In addition to ongoing credit score damage and hefty collection fees, the federal government also wields vast extrajudicial powers to collect student debt, including garnishing wages and seizing Social Security payments and tax refunds that are targeted to households with very low incomes, including the Child Tax Credit and the Earned Income Tax Credit," Zampini added. "These seizures compound financial hardship for those who can least afford it."
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