• News
  • Film and TV
  • Music
  • Tech
  • Features
  • Celebrity
  • Politics
  • Weird
  • Community
  • Advertise
  • Terms
  • Privacy & Cookies
  • LADbible Group
  • LADbible
  • SPORTbible
  • GAMINGbible
  • Tyla
  • UNILAD Tech
  • FOODbible
  • License Our Content
  • About Us & Contact
  • Jobs
  • Latest
  • Topics A-Z
  • Authors
Facebook
Instagram
X
Threads
TikTok
YouTube
Submit Your Content
Over 5,000,000 American have just days left until major student loan change could see people face dire consequences

Home> News> US News

Updated 16:31 3 May 2025 GMT+1Published 13:19 3 May 2025 GMT+1

Over 5,000,000 American have just days left until major student loan change could see people face dire consequences

And there's one person education secretary Linda McMahon blames in particular...

Poppy Bilderbeck

Poppy Bilderbeck

The US Department of Education will resume collecting repayments of defaulted student loans in a matter of days.

On April 21, the US Department of Education announced its Office of Federal Student Aid (FSA) will resume collections of its defaulted federal student loan portfolio.

The department hasn't been collecting on default loans since March 2020 when Donald Trump paused collections amid the coronavirus pandemic, with Joe Biden later extending the pause several times.

Advert

On May 5, around 1.8 million borrowers of student loans will subsequently be moved into repayment plans, and those who are already in default?

Well, the five million plus in default who are unable to pay up when the department comes knocking to collect, the repayments will face some pretty severe consequences.

Time is ticking for defaulted borrowers of student loans (Al Drago/Bloomberg via Getty Images)
Time is ticking for defaulted borrowers of student loans (Al Drago/Bloomberg via Getty Images)

The Department of Education announcement via education secretary Linda McMahon

In an op-ed for The Wall Street Journal, education secretary Linda McMahon condemned former president Biden for 'dangling the carrot of loan forgiveness in front of young voters,' subsequently seeing the Education Department 'allow students to rack up a massive debt that is now long past due'.

Advert

She argued: "Between 2021 and 2024, federal student-loan debt increased by more than $60 billion a year, while the department manipulated repayment plans and forgiveness policies until only 38 percent of the student-loan portfolio was in repayment. This is unsustainable for both students and taxpayers."

Announcing the 'end of this dishonest and irresponsible policy,' McMahon revealed plans to 'conform to the department's repayment options to federal court decisions and end the Biden-era practice of zero-interest, zero-accountability forbearances that are pushing borrowers into loan delinquency and default'.

Should borrowers be unable to pay back their loan in the repayment plans they'll be moved into, they risk their credit scores going 'down'.

"And in some cases their wages automatically garnished," McMahon added.

Advert

But how many people will actually be impacted?

McMahon blames Biden (Scott Olson/Getty Images)
McMahon blames Biden (Scott Olson/Getty Images)

How many defaulted borrowers there actually are

A press released issued by the US Department of Education on April 21, states as of that day, '42.7 million borrowers owe more than $1.6 trillion in student debt'.

Advert

Of those, 'more than five million borrowers have not made a monthly payment in over 360 days and sit in default—many for more than seven years—and four million borrowers are in late-stage delinquency (91-180 days)'.

It explains: "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."

So what happens next if you're in default?

Alas, the canceling of student debt may've now come back to bite borrowers in the butt (Daniel Steinle/Bloomberg via Getty Images)
Alas, the canceling of student debt may've now come back to bite borrowers in the butt (Daniel Steinle/Bloomberg via Getty Images)

What happens next on May 5 for defaulted borrowers

Well, defaulted borrowers will receive 'email communications from FSA over the next two weeks making them aware of these developments and urging them to contact the Default Resolution Group'.

Advert

Defaulted borrowers then have a series of options: 'make a monthly payment, enroll in an income-driven repayment plan or sign up for loan rehabilitation'.

It adds: "Later this summer, FSA will send required notices beginning administrative wage garnishment."

It resolves: "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. There will not be any mass loan forgiveness. Together, these actions will move the federal student loan portfolio back into repayment, which benefits borrowers and taxpayers alike."

Featured Image Credit: Getty Images/hobo_018

Topics: US News, Education, Money, Politics

Poppy Bilderbeck
Poppy Bilderbeck

Poppy Bilderbeck is a Senior Journalist at LADbible Group. She graduated from The University of Manchester in 2021 with a First in English Literature and Drama, where alongside her studies she was Editor-in-Chief of The Tab Manchester. Poppy is most comfortable when chatting about all things mental health, is proving a drama degree is far from useless by watching and reviewing as many TV shows and films as possible and is such a crisp fanatic the office has been forced to release them in batches.

Advert

Advert

Advert

Choose your content:

6 hours ago
7 hours ago
  • 6 hours ago

    Experts issue urgent warning against popular new tanning 'drug' that could cause brain swelling and cancer

    The viral trend promises to give users a natural glowing tan

    News
  • 6 hours ago

    Horrifying details emerge after plane carrying 200 passengers flies with no pilot after first officer collapsed

    The plane was diverted and thankfully all 200 passengers onboard landed safely.

    News
  • 7 hours ago

    Family win $100,000 in settlement after being accused of not paying $200 bill

    Peter and Ann McGirr were slammed in a Facebook post which falsely claimed they hadn't paid their bill

    News
  • 7 hours ago

    Chilling story of man who told family he was leaving with aliens and hasn't been seen since

    What happened to Granger Taylor has remained a mystery for 45 years

    News
  • Gen Xer gets $112k student loan forgiven after paying off 'worthless degree' for over a decade
  • Medical jet crashes into residential neighborhood with six people onboard just days after American Airlines crash
  • Donald Trump has just signed an executive order that could see millions of people deported
  • Entire government agency left being run by just one employee after Musk's DOGE removes all other staff