The Department of Education said Monday that the Trump administration will begin to garnish earnings from student loan borrowers in January.  This is the first time borrowers’ paychecks will be at risk since pandemic-era policies paused payments in March 2020.  Starting the week of January 7, around 1,000 borrowers in default will get notices of their status. The number of notices will increase every month throughout 2026, according to an email from the Education Department reviewed by several news organizations.  According to quarterly reports from the Education Department, as of June 30, there were about 5.3 million borrowers in default.  An individual is in default on their student loans if they have not made a payment in over 270 days. After this deadline, the Treasury Department can collect the debt by ordering an employer to withhold up to 15 percent of a borrower’s pay and taking income tax refunds and federal payments like Social Security benefits. The Education Department must notify people in default 30 days before taking their wages. During that window, people can request a hearing to challenge the order or negotiate repayment terms.  Earnings can be withheld until the loan is paid in full or the individual is removed from default status, but the New York Times reported that the Monday email from the Education Department did not say how much would be deducted from wages.  This past April, when the department announced it would resume collecting defaulted student loans, it said that 4 million borrowers are in late-state delinquency, meaning they had not made a payment in 91-180 days. “As a result there could be almost 10 million borrowers in default in a few months.”  “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” U.S. Secretary of Education Linda McMahon said at the time. In May, the Trump administration restarted taking tax refunds and Social Security benefits. This comes at a horrible time for borrowers. As I reported last week, the 20 million-plus people enrolled in the Affordable Care Act’s health insurance marketplace will experience huge spikes in premium costs. Additionally, two weeks ago, the Education Department ended Biden’s student loan forgiveness program for being too generous. But as McMahon said in April, the Department of Education will help “borrowers return to repayment—both for the sake of their own financial health and our nation’s economic outlook.”

The Department of Education announced Tuesday that it reached a settlement agreement with the state of Missouri to end former President Joe Biden’s student loan forgiveness program.  The Saving on a Valuable Education (SAVE) program bases monthly payments on an individual’s income and family size. The plan protected more borrowers’ incomes, increasing monthly payment exemptions from 150 percent to 225 percent of the federal poverty level—equating to roughly $48,000 per year for a family of two. In April 2024, Andrew Bailey, Missouri’s then-Attorney General, filed a lawsuit with the attorneys general of Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma to stop the SAVE plan. His argument was that it made student loans function more like grants, as many borrowers were paying as little as $0 per month, and that Biden had overstepped his authority by circumventing congressional approval with an executive action.  In February, a court ruled in favor of the states, and following the passage of the One Big Beautiful Bill Act, the plan was dead in the water with borrowers beginning to accrue interest at rates that for some exceeded 9 percent per year. The Tuesday settlement, if approved in court, moves this deadline forward, although the Department of Education did not specify a timeline for the changes. The agreement states that the Education Department would no longer enroll new individuals in SAVE, deny all pending applications, and transfer all approximately seven million borrowers into different plans—either fixed payment or payments based on income.  Changing millions of payment plans is complicated. There’s already a backlog of applications on the three other federal income-based plans. All but one of those plans will be gone after July 1, 2028 because of the Big Beautiful Bill. “For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their post-secondary education or never even went to college themselves,” Under Secretary of Education Nicholas Kent said. “The law is clear: if you take out a loan, you must pay it back.”  According to a report from the Congressional Research Service in the Library of Congress, nearly 43 million people—or one in six adults in the country—have federal student loan debt, all of which totals more than $1.6 trillion. This increases the burden of rising living costs: a survey of federal student loan borrowers conducted by Data for Progress in September found that 20 percent of borrowers are currently in delinquency or default and 42 percent said their debt payments made affording essentials like food or housing difficult.

There are more than 45 million people with student loans, and many more who are gearing up to go to college at a time when tuition is at record highs: The average annual cost of a private university hit nearly $60,000 in 2024. The next president will have the power to either ease that financial burden or aggravate it. And while Donald Trump’s bluster on the campaign trail has not included a lot of clarity on his policy plans, his public statements, along with the actions of his previous administration, set out a roadmap for the many ways he will try to gut the affordability of higher education for future students—while sinking those who already have student debt into a deeper financial hole. What’s more, the agenda authored by the conservative Heritage Foundation for a future Republican administration, known as Project 2025, also offers a blueprint. Trump has tried to distance himself from Project 2025, but because it was written by some of his closest allies, it is likely that, should Trump win in November, pieces of the project will become policy priorities. Here’s what a second Trump term could mean for student debt: Defunding and closing the Education Department could decimate college affordability for low-income students: At a rally in Wisconsin last month, Donald Trump said that he wants to shut down the Department of Education should he return to the Oval Office. “I’m dying to get back to do this,” he said. “We will ultimately eliminate the federal Department of Education.”  > As president, Trump proposed cutting nearly $4 billion from the Pell Grants > reserve fund—and redirecting half to NASA for space exploration: “So that we > can return to Space in a BIG WAY!” Trump couldn’t close the Education Department singlehandledly: it would require an act of Congress. But defunding the department would have far-reaching implications for education funding. A key one: The department administers $39 billion of Pell Grants, scholarships awarded to students from low-income backgrounds. About half of Pell Grants go to students whose families earn less than $20,000 per year. Without the department, it’s unclear who would distribute and oversee Pell Grants; if they’re thrown into chaos, low-income students will have little choice but to take on additional student loans. Trump has shown a willingness to compromise this crucial source of financial aid in the past: During his presidency, he proposed cutting nearly $4 billion from the Pell Grants reserve fund—and redirecting half of that to NASA for space exploration: “So that we can return to Space in a BIG WAY!” Trump tweeted at the time. Ending Public Service Loan Forgiveness: Signed into law by President George W. Bush in 2007, the PSLF program promises to cancel the remaining debt for public servants, from police offices and prosecutors to public defenders, who have made 10 years of payments on their loans. In the last four years, the Biden-Harris administration has awarded $74 billion in student debt relief to public servants who’ve met PSLF’s payment requirements. But when the first wave of borrowers qualified for relief in 2017, Trump’s Education Department rejected 99 percent of applicants. His administration then proposed a 2021 budget that would have nixed PSLF entirely. That did not pass, but the goal remains: Project 2025 includes an explicit recommendation to terminate PSLF should there be a Republican president. Hampering other forms of student debt relief: In June 2023, the Supreme Court struck down President Biden’s attempt to cancel up to $10,000 of student debt for low- and middle-income borrowers. Trump called the decision a “massive win” that halted an “unconstitutional student loan gimmick.” In the wake of this decision by the Supreme Court, the Biden-Harris administration sought to provide relief another way: They launched the Saving on a Valuable Education (SAVE) Plan, an income-driven repayment program that would lower required payments for many borrowers, and forgive the remainder of their debt after somewhere between 10 and 25 years, depending on the original loan balance. Within months, more than a dozen Republican-led states had sued to shut down the program. Those lawsuits are ongoing. And it is safe to say that a Trump-Vance administration would do little to stop them: In June, Trump called Biden’s latest student debt relief efforts “vile,” while Vance has encouraged Republicans to fight student loan cancellation “with every ounce of our energy of power.” Plus, Project 2025 suggests that a future Trump administration should end all existing income-driven debt repayment plans because they are too generous. Weakening debt relief for borrowers defrauded by for-profit schools: When Betsy DeVos served as Trump’s education secretary, she rewrote an existing department rule that discharges the loans of students who attended fraudulent colleges. Her version shrunk the amount these loans could be canceled, limiting them to just three cents for every dollar spent on their degrees. Congress passed a bipartisan resolution to overturn DeVos’s rule, but Trump vetoed it, leaving her restrictions in place until Biden undid them upon taking office. Should Trump return to the White House, this relief for borrowers would very likely be on the chopping block. Causing some student loans to accrue more interest: In 2018, the Trump administrations budget proposed ending subsidized Stafford loans, which don’t accrue interest while undergraduate students are in school. This change would lead to thousands of additional dollars of debt for borrowers, many of whom are also from low-income families—about 70 percent of subsidized loan borrowers also qualify for Pell Grants. In 2018, the Center for American Progress estimated that an end to subsidized loans would saddle nearly 6 million students with an additional $2.8 billion in costs each year.