The head of the Department of Education (DOE) Linda McMahon has defended the Trump administration’s move to resume student loan debt collections, something she says colleges and universities profited from during the Biden administration when it implemented loan forgiveness measures.
According to the New York Post, the DOE announced Monday that federal student repayments would begin again from May 5, which have since gone into default for more 5.3 million borrowers.
In a Wall Street Journal op-ed, McMahon blamed the Biden administration and universities for pocketing loan dollars and making “empty promises” to students.
“Colleges and universities call themselves nonprofits, but for years they have profited massively off the federal subsidy of loans, hiking tuition and piling up multibillion-dollar endowments while students graduate six figures in the red,” McMahon wrote.
“A widely cited 2015 study found that for every dollar of increased federal caps on subsidized loans, colleges raised tuition by 60 cents,” McMahon continued. “Many of the degree-granting programs that qualify for student loans are worthless on the job market, but colleges continue to accept students to these programs and encourage them to borrow to pay for them.”
McMahon noted that “accountability is a two-way street. As we push to hold student borrowers to account, we will also push colleges to be responsible and transparent.”
Furthermore, McMahon said that restarting payments was not being done to be “unkind,” but rather took aim at former President Joe Biden for “dangling the carrot” for young voters during the 2020 election campaign.
Loan collections were deferred in 2020 during the COVID-19 pandemic by the Trump administration, but was extended by Biden, according to McMahon, who added that Biden never had the authority to forgive student loans to begin with.
“I am announcing the end of this dishonest and irresponsible policy. We will conform 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,” McMahon said.
“On May 5, we will begin the process of moving roughly 1.8 million borrowers into repayment plans and restart collections of loans in default. Borrowers who don’t make payments on time will see their credit scores go down, and in some cases, their wages automatically garnished,” she said.
McMahon added that borrowing the money and not paying it back is not a “victimless offense.”
“Debt doesn’t go away; it gets transferred to others. If borrowers don’t pay their debts to the government, taxpayers do,” McMahon said, further stating that student loans are not like consumer loans like a mortgage and need to be paid back.
“We are committed to ensuring that borrowers are paying back their loans, that they are fully supported in doing so, and that colleges can’t create such a massive liability for students and their families, jeopardizing their ability to achieve the American dream,” McMahon said.
There are currently 42.7 million borrowers owing more than $1.6 trillion in debt, according to the DOE, which further stated that more than 5 million borrowers have failed to make a single payment in almost a year, and some have not made any payments for more than seven years.
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