The Ministry of Education is poised to resume its default federal student loan collection in May for the first time since 2020.
The first Trump administration suspended introducing federal student loans to collections in March 2020 at the start of the Covid-19 pandemic, but the extension has led Trump administration officials to worry that their portfolio of federal student loans “is heading towards a financial cliff if they don’t start paying off in the collection.”
“As a result, our federal student loan portfolio continues to grow, with record borrowers with arrears and risk of defaults, or delinquent and default,” he told reporters Monday.
Officials said only 40% of borrowers are making quick payments to the loan while the remaining 60% is behind.
Cuts in staffing in education sector have not hit FAFSA offices amid Trump’s cuts, the agency says
President Donald Trump will speak at a signing of an educational event and executive order in the Eastern Room of the White House in Washington on March 20, 2025.
Overall, officials said there are 4 million borrowers in late stages of payments. In other words, payments are 180 days late from 91 days.
“The current Trump administration believes that American taxpayers are no longer useful as collateral for student loans,” the official said. “Your student loan debt must be paid back.”
Similarly, officials said they would deploy communications plans to encourage borrowers to let borrowers know their status and register with cars to reduce the number of delinquents.
The policy will take effect on May 5th, when the education department partners with the Treasury’s offset program to begin collecting expired payments.
Officials also said the Department of Education is preparing to partner with lawmakers on efforts to reform the higher education and student loan repayment system.
“We fully believe that from now on, Congress will play a role in modifying the higher education system, where students are in a position to pay loan payments,” said a senior department official. “So I look forward to working with Congress on efforts to streamline loan repayments and reducing university costs.”
The bipartisan law in the work includes Senator John Toon and D-Va, who introduced a permanent clause in 2026 that sets a permanent clause that appoints employers to contribute up to $5,250 tax-free on employee loans.
Nicole Malliotakes (Rn.Y.) and Scott Peters of D-Calif introduced the law in the House of Representatives.
Trump still needs Congress’ help on plans to abolish the education sector
President Donald Trump will sign an executive order to reduce the size and scope of the education sector, along with undergraduate children signing his version, at a ceremony in the Eastern Room of the White House in Washington on March 20, 2025. (Chip Somodevilla/Getty Images)
Nearly 43 million student borrowers have federal student loan debt, according to data from the Ministry of Education.
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The Department of Education’s announcement follows the president’s campaign promise after the Trump administration announced plans to overhaul government agencies in March, and eliminates the federal impact on education to “stop your taxpayer abuse to inculcate American youth.”
Still, President Donald Trump has announced that the function of the department overseeing Pell grants, student loans, and other people serving people with special needs will continue at other agencies.
