End of an Era

[Editor's note: We have suspended our three decade long run of independent (muckraking) journalism and analysis and will let you know where we go from here. The 2024 lawsuit against founder/editor Dahn Shaulis (Chip Paucek and Pro Athlete Community v Dahn Shaulis) is pending. While the legal bill is enormous, we expect to win. In the meantime, please support independent voices like Richard Wolff, Roger Sollenberger, Julie K. Brown, and Troy Barile.  #veritas]

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On our last full day of operation, we extend our deepest gratitude to the many courageous voices who have contributed to the Higher Education Inquirer over the years. Through research, reporting, whistleblowing, analysis, and public service, you have exposed inequities, challenged powerful interests, and helped the public understand the realities of higher education.

Special thanks to:
Bryan Alexander (Future Trends Forum), J. J. Anselmi (author), Devarian Baldwin (Trinity College),  Lisa Bannon (Wall Street Journal), Joe Berry (Higher Education Labor United), Kate Bronfenbrenner (Cornell), Stephen Burd (New America), Ann Bowers (Debt Collective), James Michael Brodie (Black and Gold Project Foundation), Patrick Campbell (Vets Ed Brief), Richard Cannon (activist), Kirk Carapezza (WGBH), Kevin L. Clay (Rutgers), Randall Collins (UPenn), Marianne Dissard (activist), Cory Doctorow, William Domhoff (UC Santa Cruz), Ruxandra Dumitriu, Keil Dumsch, Garrett Fitzgerald (College Recon), Glen Ford (with the ancestors), Richard Fossey (Condemned to Debt), Erica Gallagher (2U Whistleblower), Cliff Gibson III (Gibson & Keith), Henry Giroux (McMaster University), Terri Givens (University of British Columbia), Luke Goldstein (The Lever),  Nathan Grawe (Carleton College), Michael Green (UNLV), Michael Hainline (Restore the GI Bill for Veterans), Debra Hale Shelton (Arkansas Times), Stephanie M. Hall (Protect Borrowers),  David Halperin (Republic Report), Bill Harrington (Croatan Institute), Phil Hill (On EdTech), Robert Jensen (UT Austin), Seth Kahn (WCUP), Hank Kalet (Rutgers), Ben Kaufman (Protect Borrowers), Robert Kelchen (University of Tennessee), Karen Kelsky (The Professor Is In), Neil Kraus (UWRF), LACCD Whistleblower, Michelle Lee (whistleblower), Wendy Lynne Lee (Bloomsburg University of PA), Emmanuel Legeard (whistleblower), Adam Looney (University of Utah), Alec MacGillis (ProPublica), Jon Marcus (Hechinger Report), Steven Mintz (University of Texas), John D. Murphy (Mission Forsaken), Annelise Orleck (Dartmouth), Margaret Kimberly (Black Agenda Report), Austin Longhorn (UT student loan debt whistleblower), Richard Pollock (journalist), Debbi Potts (whistleblower), Jack Metzger (Roosevelt University), Derek Newton (The Cheat Sheet), Jeff Pooley (Annenberg Center), Fahmi Quadir (Safkhet Capital), Chris Quintana (USA Today), Jennifer Reed (University of Akron), Kevin Richert (Idaho Education News), Gary Roth (Rutgers-Newark), Mark Salisbury (TuitionFit), Stephanie Saul (NY Times), Christopher Serbagi (Serbagi Law), Alex Shebanow  (Fail State), Bob Shireman (TCF), Bill Skimmyhorn (William & Mary), Peter Simi (Chapman University), Jeffrey Sonnenfeld (Yale), Gary Stocker (College Viability), Strelnikov (Wikipedia Sucks), Taylor Swaak (Chronicle of Higher Education), Theresa Sweet (Sweet v Cardona), Harry Targ (Purdue University), Moe Tkacik (American Prospect),  Kim Tran (activist), Mark Twain Jr. (business insider), Michael Vasquez (The Tributary), Marina Vujnovic (Monmouth), Richard Wolff (Economic Update), Todd Wolfson (Rutgers, AFT), Helena Worthen (Higher Ed Labor United), DW (South American Correspondent), Heidi Weber (Whistleblower Revolution), Michael Yates (Monthly Review), government officials who have supported transparency and accountability, and the countless other educators, researchers, whistleblowers, advocates, and public servants whose work strengthens our understanding of higher education.

Together, you form a resilient network of knowledge, courage, and public service, showing that collective insight can illuminate even the most entrenched systems. Your dedication has been, and continues to be, invaluable.

Dahn Shaulis and Glen McGhee

Hyper-Deregulation and the College Meltdown

In March 2025, Studio Enterprise—the online program manager behind South University—published an article titled “A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation.” Written in anticipation of a shifting political landscape, the article framed coming deregulation as an “opportunity” for flexibility and innovation. Studio Enterprise CEO Bryan Newman presented the moment as a chance for institutions and their contractors to do more with fewer federal constraints, implying that regulatory retreat would improve student choice and institutional agility.

What was framed as a strategic easing of oversight has instead arrived as a form of collapse. By late 2025, the U.S. Department of Education has become, in functional terms, a zombie agency—still existing on paper, but stripped of its capacity to regulate, enforce, or even communicate. Consumer protection, accreditation monitoring, program review, financial oversight, and FOIA responses have slowed or stopped entirely. The agency is walking, but no longer awake.

This vacuum has emboldened not only online program managers like Studio Enterprise and giants like 2U, but also a wide array of entities that rely on federal inaction to profit from students. The University of Phoenix—long emblematic of regulatory cat-and-mouse games in the for-profit sector—now faces minimal scrutiny, continuing to recruit aggressively while the federal watchdog sleeps. Elite universities contracting with 2U continue to launch expensive online degrees and certificates whose marketing and outcomes would once have been examined more closely.

Student loan servicers and private lenders have also moved quickly to capitalize on the chaos. Companies like Aidvantage (Maximus), Nelnet, and MOHELA now operate in an environment where enforcement actions, compliance reviews, and borrower complaint investigations have slowed to a near standstill. Servicers once accused of steering borrowers into costly forbearances or mishandling IDR accounts now face fewer barriers and far less public oversight. The dismantling of the Department has also disrupted the small channels borrowers once had for correcting servicing errors or disputing inaccurate records.

Private lenders—including Sallie Mae, Navient, and a growing constellation of fintech-style student loan companies—have seized the opportunity to expand high-interest refinance and private loan products. Without active federal oversight, marketing claims, credit evaluation practices, and default-related consequences have become increasingly opaque. Borrowers with limited financial literacy or unstable incomes are again being targeted with products that resemble the subprime boom of the early 2010s, but with even fewer regulatory guardrails.

Hyper-deregulation has also destabilized the federal loan system itself. Processing backlogs have grown. Borrower defense and closed-school discharge petitions sit in limbo. Decisions are delayed, reversed, or ignored. Automated notices go out while human review has hollowed out entirely. Students struggling with servicer errors find there is no functioning authority to appeal to—not even the already stretched ombudsman’s office, which is now overwhelmed and under-directed.

Across the sector, the same pattern is visible: institutions and corporations functioning without meaningful oversight. OPMs determine academic structures that universities should control. Lead generators push deceptive marketing campaigns with impunity. Universities desperate for enrollment sign long-term revenue-sharing deals without public transparency. Servicers mismanage accounts and communications while borrowers bear the consequences. Private lenders accelerate their expansion into communities least able to withstand financial harm.

Students feel the effect first and most painfully. They face rising costs, misleading claims, aggressive recruitment, and a federal loan system that can no longer assure accuracy or fairness. The collapse of oversight is not theoretical. It manifests in missed payments, lost paperwork, incorrect balances, unresolved appeals, and ballooning debt. For many, there is now no reliable path to recourse.

Studio Enterprise saw deregulation coming. What it left unsaid is that removing federal guardrails does not produce innovation. It produces confusion, predation, and unequal power. Hyper-deregulation rewards those who operate in the shadows—OPMs, for-profit chains, high-fee servicers, and private lenders—while those seeking education and mobility carry the burden.

This moment is not an evolution. It is an abandonment. Higher education is drifting into an environment where profit extraction flourishes while public protection evaporates. Unless new sources of oversight emerge—federal, state, journalistic, or civic—the most vulnerable students will continue to pay the highest price for the disappearance of the referee.

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Sources

Studio Enterprise, A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation (March 2025).
HEI archives on OPMs, for-profit colleges, and regulatory capture (2010–2025).
Public reporting and advocacy analyses on student loan servicers, including Navient, MOHELA, Nelnet, Aidvantage/Maximus, and Sallie Mae (2015–2025).
FOIA request logs, non-responses, and stalled borrower relief cases documented by HEI and partner organizations (2024–2025).
Federal higher education enforcement trends, 2023–2025.

A HUGE legal win for MILLIONS of borrowers (Protect Borrowers)

Borrowers just secured a MAJOR victory! In AFT v. U.S. Department of Education (ED), the Trump Administration agreed to protect borrowers enrolled in Income-Driven Repayment (IDR) plans and deliver student debt relief to borrowers making payments under those plans for decades.

This is a huge milestone. At the time AFT originally filed the lawsuit in March 2025—represented by Protect Borrowers and Berger Montague—the Trump Administration had removed the application to enroll in IDR from government websites and had issued a secret order to student loan contractors to halt all IDR enrollment and processing. After we filed, the government quickly resumed accepting applications and, months later, began processing those applications again. ED’s recent agreement is the first time the Trump Administration has publicly committed its intent to follow the law, after representations it made that it wouldn’t cancel debt under certain—and at times, any—IDR plan.

The Administration has now agreed to:



• Cancel student debt for all eligible borrowers enrolled in Income-Based Repayment (IBR), Income-Contingent Repayment, and Pay As You Earn payment plans and the Public Service Loan Forgiveness (PSLF) program;

• Refund any borrower who makes additional payments beyond the date of eligibility for IDR cancellation;

• Process IDR applications and PSLF Buyback applications—including applications for the IBR plan from borrowers without a partial financial hardship.

• Recognize the date a borrower becomes eligible for cancellation as the effective date of discharge and not issue IRS forms suggesting that cancelled debt is taxable for borrowers whose effective date is on or before December 31, 2025; and

• File six monthly status reports with the court on the status of its IDR and PSLF application and loan cancellation processing—increasing transparency and accountability.

This relief will extend to all borrowers.

Borrowers urgently needed this agreement. Prior to it, borrowers eligible to have their loans cancelled in 2025 were at risk of getting stuck with a large tax bill due to the Administration’s processing delays. This is because Trump and Congressional Republicans’ “One Big Beautiful Bill Act” (OBBBA) permanently extended Congress’s 2018 action to exclude cancelled debts for death or disability from federal taxable income—but not all cancelled student loan debt. As a result, millions of borrowers who earn debt relief under an IDR plan after January 1, 2026, could see their taxes skyrocket. Working families can’t shoulder thousands of dollars in additional taxes—they’re already stretched thin by rising costs of living, a weak job market, mounting levels of debt, and OBBBA’s historic cuts to public benefits.

Education Dept. Accused of Blocking Student Loan Forgiveness: A Systemic Failure

The American Federation of Teachers (AFT) has filed an amended complaint against the U.S. Department of Education and Secretary Linda McMahon, seeking class action status on behalf of millions of borrowers. The lawsuit alleges that the Department is unlawfully delaying or denying student loan forgiveness under income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF).

On paper, this is a fight about administrative backlogs and program freezes. In reality, it exposes how the U.S. higher education system continues to operate as a debt trap, where promises of relief are routinely broken, and working families are forced to subsidize a predatory credential economy.

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Debt as a Business Model

The Department of Education froze IDR processing for months, building a backlog that once stood at more than two million borrowers. Even after “restarting” the system, more than a million remain stuck. PSLF’s “Buyback” program alone is stalled with 74,000 unresolved cases.

These are not small bureaucratic hiccups—they are structural features of a system designed to delay cancellation for as long as possible. Borrowers who have made 20, 25, or even 30 years of payments are told to keep paying while they wait for forgiveness that may never come. Refunds are promised but often months away. Meanwhile, loan servicers continue to collect billions in revenue from a population already ground down by decades of repayment.

This isn’t simply mismanagement. It’s debt peonage, engineered by policymakers who present repayment as a civic duty while ensuring that the cycle of indebtedness continues.

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The Human Cost

The lawsuit documents borrowers choosing between student loan payments and medical care, postponing life decisions like marriage or homeownership, and even contemplating bankruptcy. Beyond the financial harm, there is profound psychological damage—stress, sleeplessness, and a deepening sense of betrayal by a government that promised relief in exchange for decades of faithful repayment.

The looming “tax bomb” magnifies the crisis. Unless forgiveness is processed before January 1, 2026, discharged balances under IDR will once again be taxable income. That means borrowers who finally achieve cancellation could be hit with crushing IRS bills. Congress has already acted to expand eligibility under the “One Big Beautiful Bill Act,” but the Department continues to deny applications based on rules that no longer exist.

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Historical Parallels: A Long Tradition of Debt Betrayal

The student debt crisis is only the latest in a series of American debt struggles where relief was promised but strategically withheld:

• Farm Debt in the 1980s: Family farmers were told federal programs would help restructure loans. Instead, banks and agencies delayed, forcing foreclosures that devastated rural America.

• The GI Bill’s Unequal Promise: While the GI Bill created new opportunities, Black veterans were systematically denied benefits through local gatekeeping. Access existed in theory but was obstructed in practice.

• The Mortgage Crisis of 2008: Homeowners seeking modifications found banks losing paperwork, delaying applications, and profiting from continued payments—an eerie echo of today’s student loan servicing delays.

Each moment reflects the same pattern: debt relief as rhetoric, obstruction as reality.

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A System Rigged to Fail Workers

The AFT’s legal filing is narrowly focused on the Administrative Procedure Act, accusing the Department of unlawfully withholding benefits and acting arbitrarily. But the larger structural truth is clear: the U.S. economy relies on debt as a mode of governance.

Student debt now exceeds $1.6 trillion. Universities raise tuition, Wall Street profits from securitized loans, and loan servicers pocket fees from keeping borrowers in repayment limbo. Meanwhile, adjunct professors earn poverty wages, and graduates face underemployment that makes repayment impossible. Higher education is no longer a ladder to the middle class—it is a system of extraction.

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Looking Ahead: 2027 and Beyond

Even if courts intervene before the 2026 tax deadline, borrowers face another looming threat: the 2027 austerity cuts, including deep reductions in Medicaid.

For working families, this collision will be devastating. Many borrowers already choose between student loan payments and medical care. When Medicaid cuts hit, tens of millions will lose access to basic health coverage. The financial vise will tighten: loan payments on one side, healthcare costs on the other. The most vulnerable—low-income borrowers, caregivers, the disabled—will be left with no safety net.

In this light, the Department’s refusal to process loan forgiveness is not just bureaucratic delay. It is part of a broader austerity regime that disciplines workers through debt, strips away public benefits, and reinforces a permanent underclass of the indebted.

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What’s at Stake

The AFT is asking the courts to compel the Department to process long-overdue discharges. Hearings are expected this fall, with a ruling possible before year’s end. But even if the courts side with borrowers, the deeper crisis remains: a political economy that treats debt not as a temporary burden but as a permanent condition of American life.

For borrowers, this case is about more than loan forgiveness. It is about whether the U.S. will continue its long tradition of promising relief while delivering betrayal—or whether working families will finally break the cycle of debt dependency before the coming wave of austerity in 2027 makes it even harder to escape.

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Sources

• American Federation of Teachers, Amended Complaint Against Department of Education (2025)

• U.S. Department of Education, IDR and PSLF Program Guidance

• The College Investor, “Education Dept. Accused of Blocking Student Loan Forgiveness” (2025)

• Michael Hudson, Killing the Host (2015)

• Maurizio Lazzarato, The Making of the Indebted Man (2012)

• Elizabeth Warren, The Two-Income Trap (2003)

• Bruce J. Schulman, The Seventies (2001)

Can Student Loan Debtors Work as Digital Nomads?

In recent years, the concept of working remotely while traveling—becoming a digital nomad—has become an aspirational lifestyle for many young professionals. The freedom to work from Bali, Buenos Aires, or Budapest with nothing more than a laptop and a Wi-Fi connection appeals to a generation burdened with economic precarity, stagnating wages, and dwindling faith in the American Dream.

But for over 40 million Americans burdened with student loan debt, the digital nomad lifestyle is not so simple. Can student loan debtors escape the geographic boundaries of the U.S. and work abroad without financial or legal risk? The answer depends on the type of loans, their repayment status, and how U.S. policy—particularly under presidential administrations—impacts enforcement and forgiveness.

The Debt No Passport Can Escape

Unlike credit card debt or even some tax liabilities, federal student loan debt follows Americans abroad. The U.S. Department of Education, through contracted servicers such as Aidvantage (a Maximus company), can still pursue debtors overseas. Wage garnishment, while difficult to enforce on foreign earnings, can be imposed if the debtor returns to the U.S. or has U.S.-based assets. More critically, failure to make payments can lead to loan acceleration, collection fees, and destruction of credit—regardless of one’s physical location.

Private student loans, meanwhile, can be even more punishing. While they don't have access to federal collection tools like tax refund garnishment, private lenders have fewer forgiveness options and are often aggressive in court.

Income-Driven Repayment and Remote Work

In theory, debtors enrolled in an income-driven repayment (IDR) plan could continue making small or even zero-dollar payments based on low or foreign-earned income. The Biden administration’s SAVE Plan is one such program, but its future is uncertain under political pressure and litigation.

However, reporting foreign income can be complex. Many digital nomads use foreign bank accounts, local clients, or under-the-table gigs, making it hard to verify income and remain compliant. The IRS, via the Foreign Account Tax Compliance Act (FATCA), already monitors foreign financial activity of U.S. citizens. Student loan servicers may increasingly cross-reference this information under future administrations eager to enforce repayment—especially if a second Trump administration pursues cuts to loan forgiveness or implements harsh penalties.

The Visa Question

Living abroad full-time usually requires a visa that allows remote work—a gray area in many countries. Some nations, like Portugal, Estonia, and Costa Rica, offer special digital nomad visas. However, these often require proof of steady income. A heavily indebted American with little in the bank and fluctuating freelance income might not qualify. And overstaying a tourist visa while evading loan collectors could lead to a new form of 21st-century statelessness: not legally grounded in any system, and hunted by both creditors and immigration authorities.

Loopholes and Limitations

Some student loan debtors have used their overseas lifestyle to delay or dodge repayments, either by avoiding wage garnishment or reporting low-to-no income. But this is a short-term tactic that can have long-term consequences. Defaulting on federal loans leads to disqualification from forgiveness programs and adds ballooning interest and penalties.

On the other hand, those determined to pursue Public Service Loan Forgiveness (PSLF) or new cancellation pathways must remain in qualifying U.S.-based work. International remote work doesn’t count, even if the employer is American or the job is virtual.

The Future of Debtors Abroad

With growing disillusionment in the U.S. labor market, housing unaffordability, and distrust in higher education, the idea of “exiting the system” is gaining appeal. Online forums like Reddit’s r/studentloandebt and r/digitalnomad are filled with testimonies of people seeking a way out—physically and financially.

But the federal student loan system was never designed with mobility in mind. Instead, it anchors borrowers to domestic obligations. Until policymakers make meaningful reforms—through widespread cancellation, interest elimination, or true debt jubilee—student loan debt will continue to act as a modern tether. For many, even paradise has strings attached.

Final Thoughts

Digital nomadism may offer a temporary reprieve from America’s financial rat race, but it is not a cure for systemic debt. For the student loan debtor, a life abroad might feel freer—but the burden of higher education’s broken promise still weighs heavily, no matter the zip code or time zone.

As the Higher Education Inquirer continues to investigate the exploitative nature of the U.S. credential economy, we invite student loan borrowers abroad or aspiring nomads to share their stories. In this new phase of global capitalism, the educated underclass is learning to move—but cannot yet escape.

Interest charges will restart for borrowers in SAVE forbearance (Student Borrower Protection Center)

 

Student Borrower Protection Center’s research partners are conducting a groundbreaking research study that aims to understand how Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) programs impact borrowers’ well-being. If you are currently in an IDR plan, working towards PSLF, or your loans have been cancelled through PSLF, please consider participating below (Password: REPAYE). Participate in Survey   Dahn, The Biden Administration’s Saving on a Valuable Education (SAVE) repayment plan promised to lower monthly student loan payments for millions of Americans. But legal attacks by the same conservative state attorneys general who exploited the courts to block President Biden’s original student debt relief plan resulted in a court injunction that has blocked borrowers from enrolling. Thus, borrowers have been trapped in a year-long, interest-free forbearance while their unprocessed Income-Driven Repayment (IDR) applications wait in limbo. But now, Trump and Education Secretary McMahon are saddling these borrowers with interest. Last week, the U.S. Department of Education (ED) announced that it will begin restarting student loan interest charges on August 1, 2025, for the nearly 8 MILLION borrowers stuck in this forbearance. McMahon voluntarily chose to do this—there was no state or federal court order forcing her hand. Read our Executive Director Mike Pierce’s statement on this below:   “Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement. Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track—instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out. These are teachers, nurses, and retail workers who trusted the government’s word, only to get sucker-punched by bills that will now cost them hundreds more every month. McMahon is turning a lifeline into a trap and fueling one of the biggest wealth grabs from working families in modern history. It’s a betrayal.”   Read the Full Statement In response to this announcement, we released a new analysis of this policy change, projecting that the typical SAVE borrower will be forced to pay more than $3,500 per year—or $300 per month—in unnecessary interest charges. In total, we found that affected borrowers will be charged more than $27 BILLION in interest over the next 12 months. Read Our Analysis Borrowers have suffered long enough because of the broken student loan system. Despite promises to lower costs for working families, Trump and his allies have only raised them more. Eliminating SAVE and replacing it with the Repayment Assistance Plan (RAP) created by Congressional Republicans means the typical student loan borrower will see their annual student loan costs skyrocket by $2,900—and millions of other borrowers will see their monthly loan bills increase by 50 percent. In fact, they will pay more for longer. RAP forces borrowers to pay for 30 years instead of the 20-25 year timelines of current IDR plans. And now, the Trump Administration wants to pile $27 billion dollars of interest charges over the next 12 months onto struggling borrowers. But McMahon can’t hide from her decision to drown borrowers in interest charges. We’ve been busy sounding the alarm of her policy choice in widespread coverage: Washington Post: Trump Ends Interest Subsidy for Biden’s Student Loan Repayment Plan MarketWatch: Millions of Americans are about to see their student loans accrue interest again. Here’s what to know. Daily Mail: Millions of Student Loan Borrowers to Be Hit With Crippling Interest Charges as Trump Ends Biden-Era Pause New York Times: 8 Million Federal Student Loan Borrowers Will Soon See Interest Restart Newsweek: Student Loan Update: Interest Payments Expected To Jump Thousands The attacks on borrowers and working families must end. Borrowers deserve justice—not retaliation to the tune of billions of dollars in unnecessary, harmful debt. In solidarity, Brandon Herrera Communications and Digital Strategist Student Borrower Protection Center

How the 940-Page Senate Bill Accelerates the College Meltdown

In the midst of economic uncertainty, demographic decline, and ballooning student debt, the U.S. Senate has introduced a 940-page spending and tax reconciliation bill—dubbed by some lawmakers as the “One Big Beautiful Bill Act.” But behind the political branding lies a sweeping blueprint for disinvestment in working-class Americans, especially in higher education. If passed, the bill would not only accelerate the ongoing College Meltdown—it would codify it.

Slashing the Ladder: Pell Grant Restrictions

At the heart of the bill is a deceptively simple change: redefining full-time college attendance from 12 credits per semester to 15 credits. This shift may sound technical, but its consequences are enormous.

According to the Congressional Budget Office and the National Association of Student Financial Aid Administrators (NASFAA), this new definition would result in more than 4.4 million Pell Grant recipients receiving either reduced aid or losing eligibility entirely. An estimated 1.4 million students—mostly community college attendees, part-time students, older learners, and single parents—could lose access to Pell Grants altogether.

In a nation already grappling with declining college enrollments and rising student attrition, these changes will likely push thousands more out of the system and close the door for many before they ever step into a classroom.

Medicaid, SNAP, and the Vanishing Safety Net

Higher education does not exist in a vacuum. The Senate bill proposes more than $930 billion in cuts to Medicaid over the next decade. These cuts come alongside the imposition of work requirements and cost-sharing mandates that will affect millions of low-income Americans—including a significant share of college students.

Many students depend on Medicaid for mental health support, primary care, and prescriptions. Others rely on SNAP to eat. Under the proposed legislation, these essential supports would be stripped from the very students who need them to persist in school.

A 2023 GAO report found that over 30 percent of U.S. college students experience food or housing insecurity. This bill doesn’t just ignore that crisis—it actively worsens it.

Starving Public Colleges

The federal Medicaid cuts would ripple through state budgets, forcing legislatures to make difficult decisions. In many cases, that will mean diverting funds away from public higher education systems.

Already under strain from declining enrollment and years of austerity, public colleges—especially regional universities and community colleges—would face even deeper cuts. The likely result: tuition increases, faculty layoffs, program closures, and the elimination of student services.

In effect, the bill shifts the cost burden of public education from the collective public to individual students and families, reinforcing a model of privatized risk and public abandonment.

Loans Over Grants, Profits Over People

In parallel with Pell Grant restrictions, the bill unwinds critical student loan protections put in place over the last five years. It reverses enhancements to Income-Driven Repayment (IDR) plans and proposes the elimination of Biden-era loan forgiveness programs.

These changes benefit the student loan servicing industry, which stands to profit from lengthened repayment timelines and reduced cancellation pathways. Meanwhile, borrowers—especially those from low-income backgrounds—are pushed deeper into long-term debt peonage.

For a generation already saddled with debt and entering a labor market rife with instability, the Senate bill amounts to a massive wealth transfer upward—from struggling students to banks and servicers.

Enabling the Rise of Robocolleges

The weakening of financial aid and public support creates fertile ground for low-cost, low-quality alternatives: online diploma mills, edtech credential vendors, and "robocolleges" that replace faculty with algorithms.

Without adequate Pell funding or public college access, desperate students will be more likely to fall into the traps of for-profit institutions and unaccredited providers that promise quick credentials—but often deliver worthless degrees and predatory loans.

This shift doesn’t just hurt students. It undermines the quality of the U.S. workforce, degrades academic labor, and cedes the future of education to automation and private equity.

A Future for the Few

Ultimately, the “One Big Beautiful Bill” cements a two-tiered higher education system: elite universities insulated by billion-dollar endowments, and a gutted public sector limping along under austerity, privatization, and surveillance.

It is no coincidence that these policies are being introduced as the population ages, racial and economic inequality deepens, and faith in democratic institutions erodes. Higher education, once framed as a ladder of mobility, is becoming a narrow gangplank—offering escape only to the few who can afford it.

Meltdown Legislation 

The College Meltdown is no longer a slow decline. It’s being legislated into crisis.

If passed, the Senate’s 940-page bill would mark a turning point: a systemic dismantling of the supports that make higher education possible for working-class Americans. From financial aid to public health, from state colleges to community safety nets, the tools of educational access are being hollowed out by design.

And while elite donors and legislators continue to fund their own children's paths to Princeton and Stanford, millions of other Americans will be left out—again.

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Sources:

• NASFAA: Pell Grant Aid Analysis

• Congressional Budget Office (CBO) Medicaid Cut Estimates

• Inside Higher Ed: “Community Colleges Fear Pell Changes”

• GAO Report: “Food and Housing Insecurity Among College Students”

• Brookings Institution: “Cuts to the Social Safety Net and the Future of Higher Education”

Delinquent and Disillusioned: The Student Loan Crisis Reignites Amid Economic and Policy Failures

Millions of student loan borrowers in the United States are falling behind on payments now that the COVID-era federal loan pause has ended—and the economic and personal consequences are mounting fast. The recent Wall Street Journal article “Millions of Americans Had Their Student-Loan Payments Put on Pause During the Pandemic. Now They Are Back on the Hook Again” paints a sobering picture of what happens when borrowers, many already living paycheck-to-paycheck, are reinserted into a punitive debt system with little warning or preparation.

According to the WSJ report, 5.6 million borrowers were marked newly delinquent in just the first quarter of 2025, as credit reporting resumed and wage garnishment letters started showing up in mailboxes. Delinquency rates surged from 0.7% to 8%, returning to pre-pandemic levels with alarming speed. While this may be a statistical “reversion to the mean” in economic terms, for those affected, it's a hard shock that could derail financial stability for years to come.

A System Ill-Equipped for Restart

The Biden administration’s temporary on-ramp expired in the fall of 2023. Since then, servicers, borrowers, and regulators have all struggled with the logistical and psychological whiplash of rebooting a system that had been on hold for over three years. Meanwhile, the Trump administration—eager to reassert austerity and fiscal discipline—has resumed the aggressive collections practices that defined the pre-pandemic era: wage garnishments, tax refund seizures, and Social Security offsets.

For millions, this reactivation has not come with transparency or support. Many received letters from unfamiliar loan servicers, the result of reshuffling in the student loan servicing industry during the pandemic. As University of Cambridge economist Constantine Yannelis told WSJ, borrowers who graduated during the payment pause may not have ever experienced repayment, and are now blindsided by bureaucratic demands and crumbling credit.

Credit Collapse and Economic Spillover

Among the most concerning revelations: borrowers with once-strong credit profiles are being dragged down. Nearly 2.4 million people with near-prime or prime credit ratings experienced sharp score declines—up to 177 points for those with scores over 720. That drop could shut borrowers out of mortgages, car loans, and even rental opportunities, extending the economic pain well beyond student debt.

Morgan Stanley economists warn that monthly student loan payments will rise by $1 billion to $3 billion, potentially shaving 0.1 percentage point from the 2025 U.S. GDP. While modest at the macroeconomic level, that drop represents hundreds of thousands of families tightening budgets, delaying major purchases, or skipping payments on other essentials.

And the demographic picture of who is struggling directly refutes tired stereotypes. University of Chicago economist Lesley Turner emphasized that those falling behind are not entitled Ivy League grads but disproportionately working-class Americans—especially those who attended for-profit or two-year colleges, or dropped out before earning a degree. Mississippi, where 45% of borrowers are delinquent, stands out as a cautionary tale in both poverty and policy failure.

A Fractured Policy Landscape

What’s happening now is not just a predictable economic phenomenon—it’s the result of a fractured and politically volatile policy environment. Biden’s efforts to implement broad debt relief through the SAVE plan and other targeted forgiveness efforts have been challenged in court and undermined by executive overreach claims. That legal uncertainty left many borrowers falsely optimistic that repayment would be permanently suspended or forgiven, influencing their financial planning.

Meanwhile, the ideological pendulum continues to swing: progressive reforms like income-driven repayment and borrower defense to repayment have been inconsistently applied, undercut by administrative churn and legal ambiguity. Now, under a returning Trump administration, the Department of Education is once again prioritizing collections over compassion.

What Happens Next?

There’s no clear trajectory forward. As Duke economist Michael Dinerstein noted, the path could go in either direction. If borrowers respond to delinquency warnings and enter into income-driven repayment (IDR) plans like SAVE, we may see stabilization. But without real outreach, forgiveness, or structural reform, millions more may default—and carry the economic scars for decades.

At the Higher Education Inquirer, we see this moment as a pivotal test—not just of financial resilience, but of our society’s willingness to reckon with an education system that has long promised mobility while delivering debt. The student loan system was broken before COVID. The pause merely masked the underlying rot. Now, with repayments back in motion, the cracks are widening into chasms.

If the U.S. is serious about building a stable middle class, supporting higher education access, and ensuring economic mobility, it must move beyond temporary pauses and court-contested forgiveness. We need durable reform, not debt servitude masquerading as opportunity. Until then, millions of Americans will remain caught in the crossfire between broken promises and broken policies.

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For ongoing investigations into student debt, contingent labor, and the collapse of trust in U.S. higher education, follow the Higher Education Inquirer. 

The Cruelty of Compliance: How the Trump Administration’s FSA Notice Doubles Down on Student Debtors While Privileging the Higher Education Racket

The U.S. Department of Education, under the renewed influence of the Trump Administration and its deep-pocketed friends in the for-profit and debt collection industries, has issued a chilling reminder of just how little it cares for the tens of millions of Americans drowning in student debt. Cloaked in bureaucratic language and peppered with sanctimonious calls for “shared responsibility,” the Department’s latest notice is, in truth, a battle cry in its war to privatize higher education, scapegoat the vulnerable, and enrich corporate cronies at the expense of working families.

Let’s call this what it is: a renewed assault on the student debtor class—the adjunct professors, the first-generation college students, the single mothers, the underemployed graduates who were sold a dream of economic mobility and handed a lifetime of debt servitude.

According to the Department, only 38% of borrowers are current on their loans, and nearly a quarter of all loans are in default or severe delinquency. Rather than treating this figure as evidence of systemic failure—ballooning tuition, predatory lending, lack of loan forgiveness—the Department responds by resuming draconian collection measures like the Treasury Offset Program and Administrative Wage Garnishment. This means that the government will begin seizing tax refunds and garnishing wages of those already pushed to the economic brink.

Worse, the Department has the audacity to wrap this cruelty in the rhetoric of “support” and “outreach.” Borrowers are told that they’ll be reminded of their “repayment obligations” as if they have simply forgotten—not that they’ve been buried under compound interest, stagnating wages, and fraudulent institutions that peddled worthless degrees. The supposed “enhancements” to income-driven repayment plans are little more than PR spin, insufficient to address the tidal wave of suffering inflicted by a broken system.

Then comes the most insulting part: the Department deflects blame onto institutions while simultaneously pressuring them to track down and guilt-trip former students. Colleges are urged to contact former enrollees and remind them they’re obligated to pay. Why? Not out of concern for their welfare—but because high cohort default rates (CDRs) might threaten those institutions' eligibility for federal aid money.

So we see the real game here: this isn’t about protecting students. It’s about protecting the federal loan program as a revenue engine and shielding the reputations of colleges—especially the for-profit diploma mills that flourished under prior Republican administrations. These institutions can continue hiking tuition and churning out underprepared graduates because the government, under Trump and his Department of Education appointees, would rather collect on unpayable loans than hold schools accountable.

Even more dystopian is the Department’s plan to publicly release “loan non-payment rates by institution.” While transparency sounds virtuous, this move will undoubtedly be weaponized—not to shut down abusive schools but to further stigmatize borrowers, especially those from marginalized backgrounds who attended underfunded schools with few resources.

Nowhere in this document is there any meaningful discussion of debt relief, student protections, or reining in college costs. Nowhere is there a reckoning with the fact that federal student aid has been transformed from a tool of opportunity into a tool of coercion. Instead, the Trump Administration signals it is open for business—the business of extracting wealth from the poor and funneling it into the private sector.

This notice is more than a policy update. It is a declaration of values. And those values are clear: Profit over people. Compliance over compassion. Privatization over public good.

The Higher Education Inquirer stands with the debtors. We see through the lies of “fiscal responsibility” and “integrity.” And we will continue to expose every cynical maneuver designed to crush the educated underclass in the name of neoliberal orthodoxy.

To student borrowers: You are not alone. You are not a failure. You are a victim of a system that was never built to serve you.

Here's the actual post from the US Department of Education, Federal Student Aid, dated May 5, 2025:

 

The United States faces critical challenges related to the federal student loan programs. According to estimates from the U.S. Department of Education (Department), only 38% of Direct Loan and Department-held Federal Family Education Loan Program borrowers are in repayment and current on their student loans. We also estimate that almost 25% of the entire portfolio is either in default or a late stage of delinquency. 

Given these challenges, the Department is taking immediate steps to engage student borrowers and support the repayment of their federal student loans. As announced in an April 21, 2025, press release, today, the Department will resume collections on its defaulted federal student loan portfolio with the restart the Treasury Offset Program and, later this summer, Administrative Wage Garnishment. The Department has also initiated an outreach campaign to remind all borrowers of their repayment obligations and provide resources and support to assist them in selecting the best repayment plan for their circumstances. The Department has also launched an enhanced income-driven repayment (IDR) plan process, simplifying how borrowers enroll in IDR plans and eliminating the need for many borrowers to manually recertify their income each year. 

Role of Institutions in Loan Repayment

Maintaining the integrity of the Title IV, Higher Education Act of 1965 (HEA) loan programs has always been a shared responsibility among student borrowers, the Department, and participating institutions. Although borrowers have the primary responsibility for repaying their student loans, institutions play a key role in the Department’s ongoing efforts to improve loan repayment outcomes, especially as the cost of college set solely by institutions has continued to skyrocket. Institutions are responsible for providing clear and accurate information about repayment to borrowers through entrance and exit counseling, and colleges and universities are responsible for disclosing annual tuition and fees and the net price to students and their families on the costs of a postsecondary education. The financial aid community has demonstrated its commitment to providing direct advice and counsel to students regarding their borrowing, but institutions must refocus and expand these efforts as pandemic flexibilities come to an end.

Under section 435 of the HEA, institutions are required to keep their cohort default rates (CDR) low and will lose eligibility for federal student assistance, including Pell Grants and federal student loans, if their CDR exceeds 40% for a single year or 30% for three consecutive years. The Department reminds institutions that the repayment pause on student loans ended in October 2023, and CDRs published in 2026 will include borrowers who entered repayment in 2023 and defaulted in 2023, 2024, or 2025. The Department further reminds institutions that those borrowers whose delinquency or default status was reset in September 2024 could enter technical default status / be delinquent on their loans for more than 270 days beginning in June and default this summer. As such, we strongly urge all institutions to begin proactive and sustained outreach to former students who are delinquent or in default on their loans to ensure that such institutions will not face high CDRs next year and lose access to federal student aid. 

Outreach to Former Students to Prevent Defaults

Given the urgent need to ensure that more student borrowers enter repayment and stay current on their loans, the Secretary urges each participating institution to provide the following information to all borrowers who ceased to be enrolled at the institution since January 1, 2020, and for whom they have contact information: 

• Remind the borrower that he or she is obligated to repay any federal student loans that have not been repaid and are not in deferment or forbearance;

• Suggest that the borrower review information on StudentAid.gov about repayment options; and 

• Request that the borrower log into StudentAid.gov using their StudentAid.gov username and password to update their profile with current contact information and ensure that their loans are in good standing. 

The Department urges that this outreach be performed no later than June 30, 2025. We do not stipulate how institutions reach out to borrowers, nor the specific information provided, as long as it covers the three categories described above. 

We also encourage institutions to focus their initial outreach on students who are delinquent on one or more of their loans in order to prevent defaults. We will provide additional information in the future to assist schools with identifying and communicating with these borrowers.

Publishing Loan Non-Payment Rates by Institution

The Department is committed to overseeing the federal student loan programs with fairness and integrity for students, institutions, and taxpayers. To that end, the Department believes that greater transparency is needed regarding institutional success in counseling borrowers and helping them get into good standing on their loans. 

The Department maintains data on the repayment status of federal student loan borrowers and in the past has provided information in the College Scorecard about the status of each institution’s borrowers at several intervals after they enter repayment. The Department plans to use this data to calculate rates of nonpayment by institution and will publish this information on the Federal Student Aid Data Center later this month. The Department will provide more information about this publication process soon. 

Thank you for your continued efforts to maintain the integrity of the Title IV, HEA loan programs. The Department values its institutional partners and looks forward to continued collaboration to place borrowers on the path to sustainable repayment of their loans.