Trump admin reverses course on Biden’s student debt relief—only 38% of borrowers current on payments

Collections on student loans have been paused since March 2020, at the beginning of the Covid-19 pandemic, but they will be resuming on May 5 and over 5 million borrowers on default of the loans will have to start paying back their debts.

In a press release from the DOE, Education Secretary Linda McMahon said that “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies." During the Biden administration, the former president attempted in multiple different ways to expunge the debt of borrowers who took out student loans to go to college. This included attempts after the Supreme Court ruled against his actions. He argued that even though the “Supreme Court blocked” his student debt relief, “that didn’t stop” him from getting it done.

McMahon went on to slam the policies that were instituted by Biden. “The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear,” the education secretary said.

“Hundreds of billions have already been transferred to taxpayers. 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," McMahon added.

Around 42.7 million borrowers owe over $1.6 trillion in debt to the federal government for the various loans they took out to go to college and have been helping to drive the country's student loan portfolio off a "fiscal cliff" McMahon added in the statement.

"More than 5 million borrowers have not made a monthly payment in over 360 days and sit in default—many for more than 7 years—and 4 million borrowers are in late-stage delinquency (91-180 days). As a result, there could be almost 10 million borrowers in default in a few months. When this happens, almost 25 percent of the federal student loan portfolio will be in default," the press release added.

Only 38 percent of borrowers are current on their student loan repayments and most are "either delinquent on their payments, in an interest-free forbearance, or in an interest-free deferment," the DOE added.

“Over the next two months, [Office of Federal Student Aid] will conduct a robust communications campaign to engage all borrowers on the importance of repayment,” the DOE added. “FSA will conduct outreach to borrowers through emails and social media reminding them of their obligations and providing resources and support to assist them in selecting the best repayment plan.”

“FSA intends to enlist its partners – states, institutions of higher education, financial aid administrators, college access and success organizations, third-party servicers, and other stakeholders – to assist in this campaign to restore commonsense and fairness with the message: student and parent borrowers – not taxpayers – must repay their student loans,” the department said, noting, ”There will not be any mass loan forgiveness.”