Millions Face Federal Student Loan Defaults, Wage Garnishments Restart

The Trump administration's student loan policies, supported by Congressional Republicans, have sparked concerns about significant economic harm to millions of Americans, potentially overshadowing other economic issues. Nearly 43 million Americans owe $1.6 trillion in student loan debt, with about 5.3 million currently in default, causing serious financial consequences such as damaged credit scores, wage garnishments, and difficulties in obtaining mortgages or jobs. Critics, including Sen. Elizabeth Warren, warn that the resumption of loan collections and wage garnishment will create long-lasting financial scars for borrowers, limiting their economic opportunities. The administration's actions have also disrupted Biden-era repayment plans, leaving millions of borrowers unable to make progress on debt repayment and facing more expensive payment options. Experts argue that these policies disproportionately affect vulnerable groups, including low-income and first-generation college students, while benefiting private lenders. The overall impact threatens to slow economic growth by reducing borrowers' ability to participate in key economic activities like homebuying and entrepreneurship.