Unnamed Speaker

Federal student loans are officially being referred to collections again. Millions of people now have to come up with the money or lose more of it.

This is part of a broader effort to roll back loan forgiveness policies. After years of leniency, the government is taking a different approach.

This is part of a broader effort to roll back loan forgiveness policies. After years of leniency, the government is taking a different approach.

This is part of a broader effort to roll back loan forgiveness policies. After years of leniency, the government is taking a different approach.

So if you were to sum up the government's message right now to borrowers, that message is? It's pay up or reap the consequences.

So if you were to sum up the government's message right now to borrowers, that message is? It's pay up or reap the consequences.

So if you were to sum up the government's message right now to borrowers, that message is? It's pay up or reap the consequences.

Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, May 28th. Coming up on the show, loan payments are back. Are borrowers ready?

Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, May 28th. Coming up on the show, loan payments are back. Are borrowers ready?

Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, May 28th. Coming up on the show, loan payments are back. Are borrowers ready?

About 5 million federal student loan borrowers are considered to be in default, meaning they haven't made payments in over 270 days. And earlier this month, the Department of Education put those borrowers on notice. If they didn't start paying, their debt could be sent into collections. If borrowers do go into collections, what could that look like?

About 5 million federal student loan borrowers are considered to be in default, meaning they haven't made payments in over 270 days. And earlier this month, the Department of Education put those borrowers on notice. If they didn't start paying, their debt could be sent into collections. If borrowers do go into collections, what could that look like?

About 5 million federal student loan borrowers are considered to be in default, meaning they haven't made payments in over 270 days. And earlier this month, the Department of Education put those borrowers on notice. If they didn't start paying, their debt could be sent into collections. If borrowers do go into collections, what could that look like?

If they do fall into collections, then that means that they could get their wages garnished, which means, you know, money coming right out of your paycheck. Their tax refunds may be withheld. And other federal benefits like Social Security could also be diminished or taken away.

If they do fall into collections, then that means that they could get their wages garnished, which means, you know, money coming right out of your paycheck. Their tax refunds may be withheld. And other federal benefits like Social Security could also be diminished or taken away.

If they do fall into collections, then that means that they could get their wages garnished, which means, you know, money coming right out of your paycheck. Their tax refunds may be withheld. And other federal benefits like Social Security could also be diminished or taken away.

Defaulted borrowers could have their tax benefits withheld starting next month, and they could see up to 15% deducted from their paychecks later this summer. Secretary of Education Linda McMahon said that the department is making these moves to protect taxpayers, adding that they shouldn't have to serve as collateral for, quote, irresponsible student loan policies.

Defaulted borrowers could have their tax benefits withheld starting next month, and they could see up to 15% deducted from their paychecks later this summer. Secretary of Education Linda McMahon said that the department is making these moves to protect taxpayers, adding that they shouldn't have to serve as collateral for, quote, irresponsible student loan policies.

Defaulted borrowers could have their tax benefits withheld starting next month, and they could see up to 15% deducted from their paychecks later this summer. Secretary of Education Linda McMahon said that the department is making these moves to protect taxpayers, adding that they shouldn't have to serve as collateral for, quote, irresponsible student loan policies.

The government has been trying to help Americans pay for higher education for decades. The federal student loan program that we're familiar with today dates back to 1965. And what was the theory behind that?