By Charles Switzer
2:00am PDT, Apr 24, 2025
Trump Administration to Seize Wages and Pensions for Defaulted Student Loans
On Tuesday, April 22, the second
Donald Trump administration unveiled its plan to seize wages, tax refunds and even federal pensions from individuals who refuse to repay federal student loans they have defaulted on, the
New York Post reported.
This new approach aims to address the issue of student loan defaults by leveraging government powers to collect owed debts.
White House press secretary
Karoline Leavitt outlined the plan during her weekly briefing, stating, "The government can and will collect default in federal student loan debt by withholding money from borrowers, tax refunds, federal pensions and even their wages."
Here's everything you need to know about the coming student loan repayment blitz.
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Details of the New Collection Program
The announcement followed an earlier statement from the Education Department, which had already disclosed plans to pursue the collection of wages and tax refunds from those in default.
However, it was only at this time that it became clear federal pensions would also be targeted.
The program, which had been paused under the
Joe Biden administration, is set to resume on May 5.
According to the Education Department, up to 10 million individuals could be in default soon, making up about 25 percent of the federal student loan portfolio. These borrowers will be notified within two weeks about the upcoming collection process.
Response from the Education Department and the Trump Administration
In response to the looming student loan crisis, Education Secretary
Linda McMahon stated, "American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies."
She also criticized the former Joe Biden administration's handling of the situation, claiming, "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."
McMahon further emphasized the financial burden placed on taxpayers, saying, "Hundreds of billions have already been transferred to taxpayers."
The Donald Trump administration's move to restart the collection program is reportedly part of a broader effort to ensure student loans are repaid responsibly, benefiting both the borrowers' financial health and the nation's economic outlook.
Understanding Loan Default and the Treasury Offset Program
A loan is considered in default if the borrower fails to make payments for 270 days, or roughly nine months.
Under the
Treasury Offset Program, the government has the authority to withhold 100 percent of tax returns from defaulted borrowers, 15 percent of their federal salary and 15 percent of Social Security benefits.
As of now, federal student loan borrowers owe more than $1.6 trillion in debt, a significant financial burden on both individuals and taxpayers.
Trump Administration's Stance on Loan Forgiveness
The Donald Trump administration has been vocal about its opposition to the previous administration's student loan forgiveness plan, which proposed canceling $400 billion in student loans.
Karoline Leavitt reaffirmed the administration's stance on fiscal responsibility, stating, "We must get our fiscal house in order and restore common sense to our country. If you take out a loan, you have to pay it back — very simple."
