In a significant shift for millions of federal student loan holders, the Trump administration announced that borrowers will be required to start repaying their defaulted loans or face severe consequences.
It marks the first time in five years that borrowers must confront repayment requirements, which had been paused since March 2020 due to the COVID-19 pandemic.
The Biden administration previously sought to cancel the debts of millions of borrowers, but that effort ultimately became entangled in legal battles. Now, the Trump administration asserts that the prior administration lacked the authority to enact such cancelations and is set to begin collections on May 5.
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Currently, approximately 42.7 million borrowers owe a staggering $1.6 trillion in student debt. Of these, more than five million borrowers have not made a payment in a year or more.
The Trump administration reports that only 38% of borrowers are in repayment and up to date on their loans. Those who do not bring their loans current and fail to establish a payment plan may face significant repercussions, including wage garnishments and withheld tax refunds.
To avoid these penalties, borrowers in default have at least two weeks to visit StudentAid.gov/end-default or MyEdDebt.Ed.Gov to set up a payment plan.
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This development, meanwhile, may exacerbate financial strains for many, as borrowers attempt to balance new monthly payments alongside rising costs of living and the Trump administration's tariff policies.
The administration has issued a clear message, stating, "There will not be any mass loan forgiveness."
This story was initially reported by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
