How the Trump Administration Is Putting the Squeeze on Student Borrowers

The era of student loan leniency in the US is officially over. During the Covid-19 emergency, mandatory payments on federal student loans were paused to shield borrowers from the financial repercussions of missed bills. Even after the economy recovered, multiple extensions and a grace period meant they could get away with ignoring their debts.

President Donald Trump’s return to office has brought that period to a close. His administration has restarted collections on borrowers in default, who are now eligible to have their credit scores penalized; settled a lawsuit to end the most lenient income-driven repayment plan available to borrowers; and announced that the US Department of Education will begin to dock wages and tax refunds from borrowers in default. As finances are stretched, households are likely to cut back on purchases, potentially driving down consumer spending and economic growth.