The Trump administration is starting to put millions of defaulted student-loan borrowers into collections and threatening to confiscate their wages, tax refunds and federal benefits. WSJ’s Oyin Adedoyin digs into what the restart could mean for borrowers and the economy. Annie Minoff hosts. Further Listening: -Biden’s New Plan to Cancel Student Debt -Breaking Down Student Debt Relief Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
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Millions of Americans borrowed money from the federal government to go to college. Almost 43 million of them are still paying that money back. It's a hard number to conceptualize, right? But the way I think about it is that if you don't have student loans yourself, then you probably know somebody who has student loans.
Our colleague Oyen Ededoyen covers personal finance. And for the past five years, she says paying those federal student loans felt more or less optional. The Biden administration will extend the pandemic-era freeze on those loan payments through August.
We're coming off of the piggyback of the pandemic, right? And that was a period where student loans virtually didn't exist. There were a lot of starts and stops when it came to student loan payments. You know, a lot of people were put in forbearance. A lot of people were put on pause. And so it seemed like we were in this very different, almost Twilight Zone effect when it came to the world.
Like a state of suspension. Yes, exactly. We were all kind of like, you know, fumbling about in outer space, not sure what the rules were. And now it seems like we're back on Earth. We're back in reality. That's because last month, the Department of Education made an announcement.
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.
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?
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