US education secretary Linda McMahon announced on Monday that the education department will begin debt collection on student loans which are in default. The move brings to an end leniency period, which began during the COVID-19 pandemic in 2020.
No federal student loans, including those in default, have been referred for collection since March 2020.
"Beginning May 5, the education department will begin involuntary collection through the treasury department's offset programme, which withholds from the government payments such as tax refunds, federal salaries and other benefits, from people with past due debts to the federal government," McMahon said in a statement, according to The Associated Press.
"After a 30-day notice, the department will also begin garnishing wages for borrowers in default. American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," she added.
In 2020, during his first term in office, US President Donald Trump had paused federal student loan payments and interest accrual as a temporary relief measure for student borrowers. The pause in payments was extended several times by the succeeding administration of Joe Biden through 2023, and a final grace period for loan repayments ended in October last year.
Biden, in fact, oversaw the cancellation of student loans for more than 5 million (50 lakh) borrowers. Also, despite the US Supreme Court rejecting his signature proposal for broad relief, he waived more than $183.6 billion in student loans through expanded forgiveness programmes.
In her statement, McMahon called out Biden for "going too far."
“Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” she said.
Currently, there are roughly 5.3 (53 lakh) million borrowers who are in default on their federal student loans
No federal student loans, including those in default, have been referred for collection since March 2020.
"Beginning May 5, the education department will begin involuntary collection through the treasury department's offset programme, which withholds from the government payments such as tax refunds, federal salaries and other benefits, from people with past due debts to the federal government," McMahon said in a statement, according to The Associated Press.
"After a 30-day notice, the department will also begin garnishing wages for borrowers in default. American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," she added.
In 2020, during his first term in office, US President Donald Trump had paused federal student loan payments and interest accrual as a temporary relief measure for student borrowers. The pause in payments was extended several times by the succeeding administration of Joe Biden through 2023, and a final grace period for loan repayments ended in October last year.
Biden, in fact, oversaw the cancellation of student loans for more than 5 million (50 lakh) borrowers. Also, despite the US Supreme Court rejecting his signature proposal for broad relief, he waived more than $183.6 billion in student loans through expanded forgiveness programmes.
In her statement, McMahon called out Biden for "going too far."
“Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” she said.
Currently, there are roughly 5.3 (53 lakh) million borrowers who are in default on their federal student loans
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