Trump Admin Plans to Hire Student Loan Debt Collectors: What to Know
Summary
The Trump administration plans to move collection of defaulted federal student loans from the Department of Education to the Treasury Department. Treasury’s Cross-Servicing Program can use private contractors, and more than 9 million borrowers are in default with about $234 billion in debt.Key Facts
- The Education Department and Treasury Department signed an agreement on March 19 for Treasury to service defaulted federally held student loans.
- Treasury plans to integrate the Federal Student Aid Default Resolution Group with its Cross-Servicing Program.
- The Cross-Servicing Program can use private contractors to collect delinquent federal debts.
- The planned transfer applies to defaulted loans, not all federal student loans.
- More than 9 million borrowers are in default, owing about $234 billion in total.
- Most federal student loans enter default after at least 270 days without scheduled payments.
- The Education Department delayed involuntary collection actions, including wage garnishment and tax refund offsets, while it implements changes to repayment programs.
- Student loan payments and most collection activity were suspended during the COVID-19 pandemic, and the Education Department canceled its contracts with private collection agencies.
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