Trump Officials Look to Delay Going After Defaulted Borrowers to After Midterms

Por Julia Conley — Truthout

Many Trump voters who have defaulted on student loan payments may soon have wages garnished and benefits seized.

Support justice-driven, accurate and transparent news — make a quick donation to Truthout today! 

As the Trump administration makes plans to task private debt collectors with going after millions of student borrowers in default on their federal loans, officials are reportedly pushing for the effort to begin after the midterm elections — as they grapple with the fact that many supporters of President Donald Trump are likely to be affected.

The Washington Sun reported Monday that the U.S. Department of the Treasury is planning to move forward with punitive measures after previously blocking a push by the Education Department and Office of Management and Budget to garnish wages and seize people’s benefits if their loans are in default.

As the Center for American Progress (CAP) said in a report Monday, defaults on student loans have reached record levels, with 9.5 million — or 1 in 5 — borrowers unable to make scheduled payments following the passage of the One Big Beautiful Bill Act (OBBBA).

The law eliminated the Saving on a Valuable Education (SAVE) program and forced borrowers into the Repayment Assistance Plan instead, bringing the average annual cost to $2,163 per borrower, according to CAP.

According to the Sun, administration staffers have advised officials to consider the impact that more upheaval for student borrowers — in the form of debt collectors either following through on the earlier wage-garnishing plan or seizing tax refunds and payments — would likely have on Trump voters.

“This is not who you think it is. The demographics are not good for us,” aides told officials last year when they pushed for a delay on the wage-garnishment plan.

An Associated Press analysis in July found that states with the highest rates of student loan defaults were overwhelmingly Republican-leaning, with Mississippi, Louisiana, and Alabama leading the way.

The advocacy group Protect Borrowers also found earlier this year that roughly two-thirds of all defaulted borrowers live in states Trump won in 2024.

Sources in the administration told the Sun that some officials are pushing for a further delay of the debt collection, as they ensure the Treasury Department’s portal for defaulted borrowers is working. The Defaulted Loans Support Center was launched last month with the stated goal of giving borrowers “a simple, streamlined way to understand the consequences of default and apply online to either rehabilitate or consolidate their loans.”

Others want to begin garnishing wages or seize tax payments for the current tax year ending in April 2027.

One source told the Sun that they expect many calls to government agencies “from borrowers saying: ‘What’s going on? How do I make sure this won’t happen again?’”

“It would be politically insane to do this before the midterms — but 2027 probably makes a little more sense to give Treasury time to get contracts [with debt collectors] signed, up and running,” they said.

Democratic strategist Michelle Kinney called on Democratic candidates to “get LOUD” about the reported plan to shield the White House and the GOP from accountability.

“Announced after the midterms” so they won’t be held accountable and will try to blame democrats.

Democrats need to get LOUD. This is NUTS. https://t.co/t2VqB1KSaX

Michael Pierce, executive director of Protect Borrowers, told the Sun that if the administration follows through with the plan — as families struggle with rising gas and grocery prices resulting from Trump’s tariff policy and illegal war on Iran — “what comes next will be a catastrophe for families across the country,” who will have “even less money to put food on the table or make rent.”

“Restarting debt collection the moment any political accountability has passed just shows how little interest Trump has in helping working families stay afloat,” Pierce told the Sun.

On social media, Pierce noted that despite its threats against borrowers, the administration and any debt collectors it contracts with must ensure the defaulted debts are valid for collection.

Along with the Project on Predatory Student Lending and the Debt Collection Lab at Princeton University, Protect Borrowers wrote to Treasury Secretary Scott Bessent last week, noting the “mounting evidence that the U.S. Department of Education may not have the data it needs to certify these debts for collection in the first place.”

The student loan books are cooked. Everyone knows it.

We (@BorrowerJustice @EdDebtJustice @Princeton_DCL) wrote @SecScottBessent last week, raising serious legal issues.

Any collector that follows the law must be raising them to @USTreasury, too.https://t.co/tt009mfYKp pic.twitter.com/5q2jpiPubI

“Certifying that a debt is accurate requires having accurate data on the debt in the first place,” they wrote. “According to industry experts, the default database is rife with incomplete or inaccurate records. Former federal officials described ongoing ‘material deficiencies’ in [the Debt Management and Collections System], such as dummy Social Security numbers, inaccurate loan balances, [and] missing communication records… Collecting on uncollectable debt will illegally siphon money from the most vulnerable borrowers who can afford it the least.”

Marshall Steinbaum, an associate economics professor at the University of Utah, emphasized that defaulted student loan borrowers are “overwhelmingly people whose debts would have been erased” by the student debt cancellation plan by the Biden administration, which was blocked after Republican states and other plaintiffs challenged it in court.

“Congratulations to everyone who blocked that,” said Steinbaum, “on their glorious policy success.”

Truthout is one of only a few platforms for justice-oriented, grassroots journalism. Today, we face an existential threat.

Due to Google’s launch of AI search, we’ve seen a drastic plunge in our site traffic and, as a result, our revenue. We lost 15 percent of our readership overnight. This was a readership we painstakingly built over decades, and it vanished because Google chose corporate greed over a healthy democracy.

We are fundraising right now to meet our basic operating expenses. If you can support Truthout with a one-time or monthly donation, you will make a significant impact on our work. Anything you can do makes a difference — we appreciate your support.

Julia Conley is a staff writer for Common Dreams.

Get the news you want, delivered to your inbox every day.

Truthout must raise $29,000 for our basic publishing costs this month. We are appealing to our readers to make a one-time or monthly donation. Donate now if you can!

Fonte: Truthout