The Trump administration is preparing to pursue nearly 10 million Americans in default on student loans through wage garnishment and debt collectors, according to a Monday report from The Washington Sun cited by Rolling Stone. The plan, set to roll out after the midterms, revives earlier efforts to penalize borrowers that had been shelved amid disputes between the Treasury and Department of Education over who would manage the national student debt.
The initiative comes as the administration simultaneously restricts access to federal student loans for students in lower-paying fields. Last week, the administration announced the Student Tuition and Transparency System (STATS), which requires undergraduate programs to demonstrate that graduates earn more than typical high school diploma holders, and graduate programs to show graduates earn more than typical bachelor's degree holders. Students in programs that fail to meet these thresholds would lose federal loan eligibility.
Why defaults are rising among working families
Student loan defaults have surged amid persistent inflation, stagnated wage growth, and a broader cost of living crisis two years into Trump's second term, according to Rolling Stone. The borrowers targeted by the garnishment plan are predominantly low-income workers already struggling with basic expenses.
Which careers face federal loan restrictions
The STATS system threatens federal loan access for students pursuing social work, civil services and the arts—fields that typically offer lower salaries but serve essential community functions. A former judge in the Bankruptcy Court for the District of Arizona told CNBC that changes the Trump administration has already made to the federal borrowing system, including creating unrealistic federal loan caps under the 2025 reconciliation bill, will "most likely increase" the rate of bankruptcy filings.
Department of Education cuts hamper debt relief
Under Secretary of Education Linda McMahon, who has no background in education, the Department of Education has cut roughly half its workforce, according to Rolling Stone. The majority of cuts came from the student-aid division and civil rights enforcement offices.
The reduction has already hampered borrowers seeking relief. A former judge in the Bankruptcy Court for the District of Arizona said in an interview with CNBC that once the Education Department was gutted in 2025, there were few, if any, employees who could approve the debt modifications through one of the offered programs. As a result, it has become harder to reach a settlement with the Department of Education on outstanding debt.
The offices of civil rights enforcement that were eliminated had overseen investigations into discrimination allegations against students and educators, particularly people of color, women and other minorities. The administration has redirected resources toward enforcement actions against alleged discrimination against white students and educators, Rolling Stone reported.
Why the administration delayed the announcement
The administration delayed announcing the garnishment plan until after the midterms, according to The Washington Sun, apparently to avoid announcing that the federal government would target largely low-income borrowers during an election cycle when Republicans face criticism over rising prices.