|
|
|
|
|
|
In a move poised to send millions of Americans into financial distress, the U.S. Department of Education announced this week that its Office of Federal Student Aid (FSA) will resume collections on defaulted federal student loans starting Monday, May 5, 2025. This marks the official end of a pandemic-era pause in collections that has been in place since March 2020.
The timing of the announcement is already sparking anxiety—but it's just the beginning. While collections begin next month, experts warn that by September, we could see a full-scale panic as a surge of borrowers hit the 270-day threshold for loan delinquency, legally tipping them into default status. The clock is ticking for millions who have missed or deferred payments during the chaotic restart of loan servicing.
According to the Department, 42.7 million Americans now owe more than $1.6 trillion in student loan debt. Shockingly, only 38 percent are current on their payments, and nearly 10 million borrowers are already in default or serious delinquency. These numbers are expected to climb sharply as repayment systems falter and financial strain deepens.
Education Secretary Linda McMahon, in announcing the decision, framed the return to collections as a victory for taxpayers. “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” she said, taking aim at the previous administration’s debt relief efforts, which she labeled “illegal loan forgiveness schemes.”
But for millions of borrowers—especially those from working-class backgrounds and communities of color—this policy marks the end of hope. Many had placed their faith in long-promised reforms and debt relief that never fully materialized.
Hope, however, is not entirely dead. The forthcoming book The Student Debt Crisis: America’s Moral Urgency by Dr. Jamal Watson—journalist, professor, and associate dean at Trinity Washington University—lays bare the human cost of the crisis. Scheduled for release in September 2025, the book is expected to coincide with the fallout from a wave of new defaults. Watson calls the debt system “a modern form of indentured servitude,” and his work amplifies the voices of those crushed under its weight.
Beginning next week, the Department will restart the Treasury Offset Program, which allows the federal government to seize tax refunds and federal benefits to collect on unpaid loans. Administrative wage garnishment is also scheduled to resume later this summer. Borrowers in default will receive email instructions in the coming weeks, urging them to contact the Default Resolution Group to avoid harsher penalties.
In an attempt to soften the blow, the Department has announced an enhanced Income-Driven Repayment (IDR) process, promising to streamline enrollment and eliminate annual income verification. Additionally, roughly 1.9 million stalled borrower applications, held up since August 2024, are slated for processing beginning in May.
Still, these administrative changes are unlikely to ease the broader economic pain. The reactivation of collections amid economic uncertainty and servicing confusion is expected to deepen the divide between those who can navigate the system—and those who cannot.
The Higher Education Inquirer has long tracked the rise of the “educated underclass”—graduates and dropouts alike, burdened with debt but lacking economic mobility. For them, May 5 is only the beginning. The real crisis looms in September, when an avalanche of defaults could further destabilize lives, families, and entire communities.
We will be here to report it.
If you’re facing default, garnishment, or administrative hurdles, the Higher Education Inquirer wants to hear your story. Email us confidentially to be part of our ongoing investigation.
Although President Donald J. Trump last month signed an executive order directing Secretary of Education Linda McMahon “to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education,” and although DOGE efforts and layoffs have cut the Department staff by half, the Department announced today that it will embark on an extensive round of meetings to draft new regulations governing student financial aid.
Unlike most federal agencies, the Department is generally required to engage in an elaborate process called negotiated rulemaking before it can issue or cancel regulations. This has meant — on issues from campus sexual assault to performance standards guarding against predatory college abuses — years of public hearings, formal convenings of rulemaking panels, written public comments and meetings on draft regulations, and more. It also has produced a decades-long ping pong match of final regulations made by one party and overwritten by the other, from the Obama to Trump I to Biden, followed by years of court challenges.
The first Trump administration staffed its higher education jobs with former executives of predatory for-profit colleges, and they eliminated both regulations and enforcement efforts aimed at protecting students and holding predatory schools accountable.
Today’s notice, signed by James P. Bergeron, Acting Under Secretary of Education, says the first round of Trump II negotiated rulemaking will likely include consideration of Public Service Loan Forgiveness and other loan repayment programs “or other topics that would streamline current federal student financial assistance programs.”
Other language in the notice suggests the Department may go deep, perhaps working to cancel the Biden rules creating performance standards for for-profit and career college programs (the gainful employment rule) and providing debt relief for students scammed by their colleges and government recoupment of funds from dishonest schools (the borrower defense rule). The notice opines that current regulations “may be inhibiting innovation and contributing to rising college costs” and that it wants to “streamline” the rules “while maintaining or improving program integrity and institutional quality.” “Innovation,” while a great thing for education when it can really happen, has been a buzzword used by the for-profit college industry to fight against rules aimed at protecting against predatory programs. Gutting the Biden rules would increase the vulnerability of both students and taxpayers to billions in waste, fraud, and abuse from deceptive, poor quality schools — even though the stated purpose of DOGE is to halt government excess.
When pro-student Democratic members of the House of Representatives held a press conference outside the Department headquarters yesterday after they met with McMahon to discuss such concerns, she followed them. But she quickly fled when Rep. Mark Takano (D-CA) asked her when she would shut down the building.
The Department’s rulemaking process begins with public hearings on April 29 and May 1, the first in-person at Department headquarters and the second online. Advocates for students and taxpayers should register to speak and show up to make their voices heard.
In 2005, Jonathan Kozol’s The Shame of the Nation powerfully critiqued the deeply entrenched educational inequalities that have disproportionately harmed Black, Latino, and low-income students. Kozol exposed the systemic racial and economic segregation that has continued to plague American schools, and his analysis remains deeply relevant today. However, the future of U.S. public education is at risk of becoming even bleaker under the Trump administration, especially as the federal government's role in education continues to be weakened.
The K-12 pipeline to higher education—the path students follow from early childhood through to high school—is increasingly segmented, with disparities in the quality of education between wealthy and low-income districts widening. Kozol’s focus on how underfunded urban schools limit students' opportunities remains central today. A new Trump administration, with Linda McMahon potentially leading the Department of Education, threatens to exacerbate these existing divides.
McMahon, with little background in public education, will champion policies that reduce federal oversight, resulting in less accountability for schools, particularly those in marginalized communities. The federal funding that historically helped level the playing field, particularly through programs like Title I, could be slashed, further undermining schools in low-income neighborhoods. As a result, these schools would continue to fall behind, denying their students the resources and opportunities needed to succeed in higher education.
The Trump administration's push to expand charter schools is another major policy shift that could further fragment the education system. Charter schools, while often touted as innovative solutions for struggling students, have been criticized for contributing to the already entrenched inequality that Kozol highlighted. Although some charter schools provide high-quality education, many are selective, serving predominantly higher-income students. By draining resources away from traditional public schools, charter schools perpetuate the educational divide, leaving students in underfunded public schools without the same opportunities.
The rise in charter schools often leads to an increase in school segregation, as wealthier families gain access to better-funded charter schools while lower-income students remain trapped in poorly funded public schools. This trend is especially harmful to Black, Latino, and low-income students, whose educational outcomes are already significantly worse than those of their wealthier peers. The expansion of charter schools under the Trump administration, combined with a decrease in public school funding, could result in further neglect for students in the most vulnerable communities.
Under Linda McMahon, the federal government’s role in ensuring educational equity will diminish drastically. The department has long played a critical role in enforcing civil rights protections and promoting equal access to education for all students, especially those from historically marginalized communities. Under McMahon’s leadership, however, the department may reduce its oversight, weakening protections for disadvantaged students and further deregulating education standards.
Dismantling the Department of Education will severely impact
funding for some of the most vital programs for disadvantaged students,
particularly those from low-income families and students with
disabilities. Title I, which provides essential funding to help poor
schools close achievement gaps, could be gutted or eliminated, leaving
millions of students without the resources they need to succeed. Schools
in high-poverty areas rely on Title I funds to provide tutoring,
after-school programs, and other support services that directly address
educational inequality. Similarly, the Individuals with Disabilities
Education Act (IDEA), which mandates funding for special education
programs, could face significant cuts or be poorly managed if oversight
is moved to less equipped agencies. Students with disabilities, who rely
on specialized services and accommodations to succeed in school, would
be at greatest risk of losing access to the tailored support they need.
Without these protections, both vulnerable children and their schools
could face a future where educational opportunities are increasingly
limited, further entrenching inequality and leaving these children
behind.
With fewer safeguards in place, the privatization of education could become the norm, as more school services, including special education and after-school programs, are outsourced to private companies. This would leave the most vulnerable students without the necessary support to succeed, particularly in crucial areas like literacy and numeracy.
The persistent gaps in math and reading literacy are among the most pressing challenges in American education. Despite efforts to improve educational outcomes, a significant disparity remains in the proficiency levels of students based on race and socioeconomic status. According to the National Assessment of Educational Progress (NAEP), only about 35% of Black and Latino 4th-graders are proficient in reading, compared to 50% of White students. Similarly, in math, only 25% of Black and Latino 8th-graders reach proficiency, compared to nearly 45% of White students.
These gaps are not merely statistical—they represent the unequal opportunities that students in underserved schools face. When underfunded schools struggle to attract and retain qualified teachers, or fail to provide students with essential learning resources, these disparities deepen. In a system where wealthy districts receive far more funding and resources, these gaps are perpetuated.
Under the Trump administration’s proposed policies, which prioritize charter schools and private sector involvement, students in public schools—especially those in impoverished areas—could see even fewer resources dedicated to addressing these literacy gaps. Charter schools, with their selective nature, may be able to provide higher-quality instruction in some cases, but this further isolates students who remain in traditional public schools with large class sizes and inadequate materials.
Making US Schools Less Accountable
The dismantling of the Department of Education would also jeopardize critical data collection and national testing systems that are vital for understanding and addressing the state of education in the United States. The National Center for Education Statistics (NCES), which operates under the Department of Education, is the primary source of reliable, comprehensive data on student performance, educational attainment, and resource allocation across the country. Without the NCES, efforts to assess educational disparities, track progress over time, and formulate evidence-based policies would be severely hindered. Additionally, national testing programs like the National Assessment of Educational Progress (NAEP), often referred to as the "Nation’s Report Card," provide valuable insights into student achievement and educational trends at the national and state levels. These assessments help inform policy decisions and highlight areas in need of intervention. Without these data-gathering tools, policymakers and educators would be left without a clear picture of how schools are performing, making it far more difficult to address systemic inequities or improve educational outcomes nationwide. The loss of these resources would leave the U.S. education system flying blind, unable to measure success or pinpoint areas for improvement.
One of the most damaging practices exacerbating the literacy crisis in American schools is social promotion—the practice of advancing students to the next grade level, despite their failure to meet basic academic standards. Social promotion is often used to avoid the stigma of holding students back, but in reality, it perpetuates the cycle of educational inequity by masking deep-rooted academic struggles.
For students in underfunded schools—particularly those in low-income neighborhoods—social promotion delays crucial interventions. Students who are promoted without mastering basic literacy and numeracy skills are allowed to move forward with significant gaps in their knowledge. By the time they reach high school, it is often too late to catch up, and many of these students find themselves unprepared for the rigors of higher education or the workforce.
Social promotion is particularly harmful for students of color, who are already more likely to attend schools with fewer resources and less experienced teachers. When these students are promoted despite not having the foundational skills needed for success, they are set up for failure. This delayed intervention further widens the achievement gap and reduces their chances of succeeding in higher education.
As the Trump administration’s policies could continue to reduce federal oversight and place more control in the hands of state and local governments, the problem of social promotion could go unchecked. Without a strong, federally mandated system of accountability, more students may be left behind, and the opportunity to fix the systemic issues before it’s too late will be missed.
In addition to the academic challenges, discipline policies in schools have long contributed to the inequities Kozol highlighted. The school-to-prison pipeline, which disproportionately impacts Black and Latino students, has resulted in higher rates of suspension, expulsion, and even criminal justice involvement for students of color. Under the Trump administration, this pipeline could be exacerbated by loosening federal regulations and reducing accountability for discriminatory disciplinary practices.
The expansion of charter schools could further isolate students of color, as these schools often have less stringent rules for discipline and may screen out students who are considered high-risk. This leaves public schools, especially in poorer neighborhoods, dealing with the fallout of disproportionate discipline practices, which can lead to higher dropout rates, decreased academic engagement, and fewer opportunities for college readiness.
While the dismantling of the U.S. Department of Education and the increased push for charter schools under the Trump administration threaten to deepen the educational crisis, there is still hope. Advocacy for stronger public education, equitable funding, and systemic reform must continue to be at the forefront of the national conversation. Kozol’s work serves as a powerful reminder of the devastating consequences of neglecting America’s most vulnerable students. Without urgent action to address the disparities in educational resources, teacher quality, and funding, the gaps in math and reading literacy will only grow wider, and the K-12 pipeline to higher education will become more fragmented.
Efforts to combat these inequities could include increased investment in early childhood education, improved access to social-emotional learning programs, and a renewed commitment to ensuring that all students, regardless of race or background, have access to the same opportunities for success. However, this can only happen if the federal government plays a strong role in holding schools accountable and ensuring equitable access to resources.
Ultimately, as Kozol’s critique has shown, the educational divide in America will continue to grow unless systemic changes are made. If the focus shifts away from equity and toward privatization and deregulation, the cycle of educational inequality will continue to harm the students who need help the most, leaving them without the tools they need to succeed in higher education and beyond.
FOR IMMEDIATE RELEASE SAN DIEGO, Calif. — Activist San Diego, in collaboration with 50501 San Diego, will host a grassroots rally Tuesday, April 8, protesting the elimination of the Department of Education and the billions of dollars in lost funding that will negatively impact our parents, teachers, and educators.
The event coincides with Department of Education Secretary Linda McMahon's appearance at the ASU + GSV Summit at the Manchester Grand Hyatt.
Event Details:
The "Hands Off Our Schools!" rally aims to challenge current educational policy directions and amplify community voices. Laurie, a mother of two special needs students describes her reason for speaking out.
"As a mother of two vibrant, neurodivergent daughters, my parenting journey is unique. I've had to navigate private insurance, MediCal, Regional Center supports, Early Start programs, developmental therapy networks, and our public school system.
This work is challenging, but it's called me to action—especially when our support systems are threatened. Public schools are a safe haven for families like mine. I worry there may not be a place where my girls will be accepted, supported and celebrated. That's why I stand against efforts to dismantle the Department of Education."
Media Opportunities
Speakers will be available for interviews during the event, please contact Coleen Geraghty below if you are interested in an interview. The complete speaker lineup is being finalized, additional updates will be sent as more information becomes available.
Media Contact:
Coleen Geraghty
coleengeraghty@gmail.com
619-709-4188
Impact of Department of Education Dismantlement on Higher Education Act Programs
|
|
|
|
|
|
|