Trump administration prepares measures targeting student loan defaulters — Rolling Stone
In the United States, President Donald Trump’s administration is reportedly preparing new measures after the midterm elections targeting nearly 10 million borrowers who have defaulted on student loans. The proposals include involving debt collectors and potentially withholding funds from debtors’ wages and social benefits, Rolling Stone reports, citing The Washington Sun.
Implementation after the elections
Sources for The Washington Sun said the plan is intended to be implemented after the midterm elections. Rolling Stone writes that previous attempts by the administration to tighten measures against student loan debtors were not implemented due to discussions between the U.S. Treasury Department and the Department of Education over who would manage the national student debt.
According to the outlet, the number of defaults on student loans has steadily increased amid inflation, slow wage growth and high living costs.
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New rules for educational programs
The measures targeting debtors are part of the administration’s broader policy on access to federal student loans. Last week, the administration announced its intention to limit access to such loans for students in programs whose graduates have low incomes.
Under the Student Tuition and Transparency System, bachelor’s programs will have to demonstrate that their graduates earn more than a typical holder of a high school diploma. For postgraduate programs, graduates’ income must exceed that of a typical holder of a bachelor’s degree. If a program does not meet these criteria, its students will not be eligible for federal loan programs.
Experts cited by Rolling Stone warn that the restrictions could significantly affect the training of specialists for social and public services, as well as the arts sector. A former judge of the U.S. Bankruptcy Court for the District of Arizona told CNBC that changes to the federal borrowing system already introduced by the administration will most likely increase the number of bankruptcy filings.
