List of Government Contractors Involved with the Student Loan Portfolio

Thanks to Alan Collinge and Student Loan Justice for this information on government contractors for the US Department of Education's Student Loan Portfolio. 

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.

Risepoint: The Rise and Fall of Another OPM?

In recent years, the online education sector has seen dramatic growth, largely fueled by partnerships between universities and Online Program Managers (OPMs) like Risepoint (formerly known as Academic Partnerships). These companies promised to help institutions expand their online offerings, providing technical support, marketing services, and student recruitment in exchange for a significant share of tuition revenue. However, as OPMs grew in power, their business models came under intense scrutiny for potentially exploitative and predatory practices.

The Rise of Risepoint

Risepoint, initially founded as Academic Partnerships (AP) in 2007 by Randy Best, became a leading player in the OPM space, helping universities launch and manage online degree programs. In return, Risepoint took a significant cut of the tuition fees, sometimes as much as 50%. The company’s model relied heavily on tuition-share agreements, which have long been controversial due to the significant financial burden they place on both institutions and students.

These arrangements became more contentious as the cost of higher education continued to rise, particularly in the case of online degrees. Critics argue that the large sums taken by OPMs like Risepoint divert essential funds from universities, leading to higher tuition fees and contributing to the growing student debt crisis. This concern has been amplified by the rise in aggressive recruitment tactics employed by OPMs, which often target low-income students with promises of easy access to higher education without fully disclosing the financial implications.

Randy Best's Ties to Republicans: A Controversial Network

Randy Best, the founder of Academic Partnerships, had close connections to prominent Republicans, including Jeb Bush, the former governor of Florida. Best has been a well-known advocate for education reform and has built a network of relationships within both political parties. His close ties to Bush, a key figure in education policy, have been part of a broader pattern of OPM companies gaining influence across the political spectrum.

This bipartisan network of political connections allowed Best and Academic Partnerships to navigate the political landscape and expand their reach in the higher education sector. However, critics argue that such ties may have contributed to a lack of accountability for OPM companies like AP/Risepoint, who have operated with little oversight while profiting off of public institutions.

Risepoint's Ownership: The Vistria Group and Its Ties to the Obama Administration

A key piece of Risepoint’s corporate structure lies in its ownership by Vistria Group, a Chicago-based venture capital firm with close ties to political and corporate elites, including former President Barack Obama. In 2019, Vistria Group acquired Academic Partnerships for its Vistria II fund, adding the company to a broader portfolio that includes a number of for-profit education assets such as Edmentum, Vanta Education, FullBloom Education, MSI Information Services, Apollo Education Group (which includes the University of Phoenix), and Unitek Learning.

Vistria’s co-founder, Marty Nesbitt, is a close friend of Barack Obama, and the firm has been associated with several high-profile political figures. Nesbitt himself is known to have worked closely with Obama on various initiatives, and his connections have helped Vistria expand its reach in the education sector. The firm’s investment in Risepoint underscores a broader trend of venture capital firms seeking profit from higher education, leading to concerns about the growing corporate influence on public institutions and their students.

The Controversy at the University of Texas-Arlington

The close connections between OPMs and university leaders have not been without scandal. In 2020, Vistasp Karbhari, the president of the University of Texas-Arlington, resigned following a controversy involving his relationship with Academic Partnerships. Karbhari had accepted two international trips paid for by the company, sparking an investigation into potential conflicts of interest. The university had paid Academic Partnerships more than $178 million over a five-year period for managing its online degree programs.

This situation drew public attention to the potential for improper financial relationships between university administrators and private OPM companies. The high cost of these partnerships, particularly the large amounts paid to OPMs like Academic Partnerships, raised questions about whether universities were prioritizing student outcomes or simply enriching private firms at the expense of public funds.

Minnesota Leads the Way: A State Takes Action

The controversy surrounding tuition-share deals reached a boiling point in 2024 when Minnesota became the first state to pass legislation restricting these agreements. St. Cloud State University in Minnesota had signed a tuition-share deal with Risepoint that resulted in the company receiving a substantial percentage of tuition revenue. Critics of the arrangement argued that the deal drained valuable resources from public universities, while enriching private companies at the expense of students.

In response to mounting pressure, Minnesota lawmakers passed a bill banning new tuition-share agreements with OPMs, signaling a shift toward greater oversight of these partnerships. The move was hailed by critics as a much-needed reform to protect public institutions and students from exploitative business models.

Senate Concerns and Growing Backlash

In addition to state-level efforts, U.S. Senators Elizabeth Warren, Sherrod Brown, and Tina Smith raised concerns over OPM practices in a 2024 letter to eight major OPM companies, including Risepoint. The senators questioned whether the recruitment tactics and revenue-sharing models contributed to rising student debt and whether these companies were sufficiently transparent about how tuition funds were being used.

“We continue to have concerns about the impact of OPM partnerships on rising student debt loads,” the senators wrote. They specifically targeted the high percentage of tuition revenue taken by OPMs, arguing that this model created financial disincentives for universities to lower costs or improve educational outcomes for students.

In response, Risepoint and other OPM companies indicated a willingness to engage with policymakers, but the growing scrutiny of their business practices indicates that their influence in the higher education space may be waning.

Academic Partnerships Acquires Wiley’s Online Business

In an interesting turn of events, AP/Risepoint expanded its reach in November 2023 by acquiring Wiley’s online business for $150 million. This acquisition is part of a broader trend of consolidation in the OPM sector, as companies seek to maintain their competitive edge in an increasingly saturated market.

The deal underscores Risepoint’s ambition to broaden its portfolio of online education services, even as its business practices face growing criticism. While Risepoint sees this acquisition as a growth opportunity, others view it as a sign of the consolidation of power within the OPM sector—a market that has been repeatedly criticized for its lack of transparency and for its role in inflating costs for both universities and students.

New Department of Education Guidelines

As the federal government joined the conversation, the U.S. Department of Education took steps to regulate the OPM industry more closely. In January 2025, the department issued new guidance that could lead to penalties for colleges that allow their OPM partners to mislead students. The guidance prohibits OPM employees from using college email addresses or signatures that imply they are employed by the institution, as well as from misrepresenting the quality of online programs.

The Department of Education’s actions came in response to long-standing concerns about misleading marketing practices. Student advocacy groups have called for stronger oversight of OPMs, which often promise students high-quality education without fully disclosing the financial ramifications. “OPMs commonly mislead students about the quality of their online programs, and that is illegal,” said Carolyn Fast, director of higher education policy at The Century Foundation.

The Decline of OPM Growth

However, the OPM industry is showing signs of slowing down. A report by Validated Insights in October 2024 revealed that OPM growth has dramatically slowed, with 147 partnerships ending in 2023—the highest number of contract terminations since 2020. Additionally, new contracts for 2024 have dropped by more than 50%. This slowdown signals that many universities are reevaluating their reliance on OPMs like Risepoint, opting instead to bring online programs in-house or partner with alternative providers.

The reduction in OPM partnerships reflects broader trends in higher education, where increasing scrutiny over business models, rising student debt, and calls for greater accountability are reshaping the landscape. Universities are under increasing pressure to justify the cost and efficacy of online degree programs, and many are finding that the financial burden of partnering with OPMs may no longer be sustainable.

The Future of Risepoint and the OPM Industry

The scrutiny surrounding Risepoint and other OPMs is part of a larger conversation about the future of online education and the need for greater transparency in how these programs are marketed and funded. As states like Minnesota lead the charge to limit tuition-share agreements, and as federal agencies take a more active role in regulating the industry, the days of unchecked growth for OPMs may be numbered.

Risepoint, once a leader in the OPM space, now faces a rapidly changing regulatory environment that threatens its business model. While the company continues to acquire new assets like Wiley’s online business, the industry as a whole may be entering a period of retrenchment, with universities becoming more cautious about entering into partnerships with companies that take a large cut of tuition revenue.

As the OPM industry faces increasing scrutiny and regulatory challenges, the future of companies like Risepoint remains uncertain. What is clear, however, is that the once-booming market for online program management is shifting, and the predatory practices that have long been associated with OPMs are being closely examined. Whether Risepoint can adapt to these changes or whether the OPM model as a whole will undergo significant reform remains to be seen.

Social Security Offsets and Defaulted Student Loans (CFPB)

Executive Summary

When borrowers default on their federal student loans, the U.S. Department of Education (“Department of Education”) can collect the outstanding balance through forced collections, including the offset of tax refunds and Social Security benefits and the garnishment of wages. At the beginning of the COVID-19 pandemic, the Department of Education paused collections on defaulted federal student loans.¹ This year, collections are set to resume and almost 6 million student loan borrowers with loans in default will again be subject to the Department of Education’s forced collection of their tax refunds, wages, and Social Security benefits.² Among the borrowers who are likely to experience forced collections are an estimated 452,000 borrowers ages 62 and older with defaulted loans who are likely receiving Social Security benefits.³

This spotlight describes the circumstances and experiences of student loan borrowers affected by the forced collection of Social Security benefits.⁴ It also describes how forced collections can push older borrowers into poverty, undermining the purpose of the Social Security program.⁵

Key findings

• The number of Social Security beneficiaries experiencing forced collection grew by more than 3,000 percent in fewer than 20 years; the count is likely to grow as the age of student loan borrowers trends older. Between 2001 and 2019, the number of Social Security beneficiaries experiencing reduced benefits due to forced collection increased from approximately 6,200 to 192,300. This exponential growth is likely driven by older borrowers who make up an increasingly large share of the federal student loan portfolio. The number of student loan borrowers ages 62 and older increased by 59 percent from 1.7 million in 2017 to 2.7 million in 2023, compared to a 1 percent decline among borrowers under the age of 62.
• The total amount of Social Security benefits the Department of Education collected between 2001 and 2019 through the offset program increased from $16.2 million to $429.7 million. Despite the exponential increase in collections from Social Security, the majority of money the Department of Education has collected has been applied to interest and fees and has not affected borrowers’ principal amount owed. Furthermore, between 2016 and 2019, the Department of the Treasury’s fees alone accounted for nearly 10 percent of the average borrower’s lost Social Security benefits.
• More than one in three Social Security recipients with student loans are reliant on Social Security payments, meaning forced collections could significantly imperil their financial well-being. Approximately 37 percent of the 1.3 million Social Security beneficiaries with student loans rely on modest payments, an average monthly benefit of $1,523, for 90 percent of their income. This population is particularly vulnerable to reduction in their benefits especially if benefits are offset year-round. In 2019, the average annual amount collected from individual beneficiaries was $2,232 ($186 per month).
• The physical well-being of half of Social Security beneficiaries with student loans in default may be at risk. Half of Social Security beneficiaries with student loans in default and collections skipped a doctor’s visit or did not obtain prescription medication due to cost.
• Existing minimum income protections fail to protect student loan borrowers with Social Security against financial hardship. Currently, only $750 per month of Social Security income—an amount that is $400 below the monthly poverty threshold for an individual and has not been adjusted for inflation since 1996—is protected from forced collections by statute. Even if the minimum protected income was adjusted for inflation, beneficiaries would likely still experience hardship, such as food insecurity and problems paying utility bills. A higher threshold could protect borrowers against hardship more effectively. The CFPB found that for 87 percent of student loan borrowers who receive Social Security, their benefit amount is below 225 percent of the federal poverty level (FPL), an income level at which people are as likely to experience material hardship as those with incomes below the federal poverty level.
• Large shares of Social Security beneficiaries affected by forced collections may be eligible for relief or outright loan cancellation, yet they are unable to access these benefits, possibly due to insufficient automation or borrowers’ cognitive and physical decline. As many as eight in ten Social Security beneficiaries with loans in default may be eligible to suspend or reduce forced collections due to financial hardship. Moreover, one in five Social Security beneficiaries may be eligible for discharge of their loans due to a disability. Yet these individuals are not accessing such relief because the Department of Education’s data matching process insufficiently identifies those who may be eligible.

Taken together, these findings suggest that the Department of Education’s forced collections of Social Security benefits increasingly interfere with Social Security’s longstanding purpose of protecting its beneficiaries from poverty and financial instability.

Introduction

When borrowers default on their federal student loans, the Department of Education can collect the outstanding balance through forced collections, including the offset of tax refunds and Social Security benefits, and the garnishment of wages. At the beginning of the COVID-19 pandemic, the Department of Education paused collections on defaulted federal student loans. This year, collections are set to resume and almost 6 million student loan borrowers with loans in default will again be subject to the Department of Education’s forced collection of their tax refunds, wages, and Social Security benefits.⁶

Among the borrowers who are likely to experience the Department of Education’s renewed forced collections are an estimated 452,000 borrowers with defaulted loans who are ages 62 and older and who are likely receiving Social Security benefits.⁷ Congress created the Social Security program in 1935 to provide a basic level of income that protects insured workers and their families from poverty due to situations including old age, widowhood, or disability.⁸ The Social Security Administration calls the program “one of the most successful anti-poverty programs in our nation's history.”⁹ In 2022, Social Security lifted over 29 million Americans from poverty, including retirees, disabled adults, and their spouses and dependents.¹⁰ Congress has recognized the importance of securing the value of Social Security benefits and on several occasions has intervened to protect them.¹¹

This spotlight describes the circumstances and experiences of student loan borrowers affected by the forced collection of their Social Security benefits.¹² It also describes how the purpose of Social Security is being increasingly undermined by the limited and deficient options the Department of Education has to protect Social Security beneficiaries from poverty and hardship.

The forced collection of Social Security benefits has increased exponentially.

Federal student loans enter default after 270 days of missed payments and transfer to the Department of Education’s default collections program after 360 days. Borrowers with a loan in default face several consequences: (1) their credit is negatively affected; (2) they lose eligibility to receive federal student aid while their loans are in default; (3) they are unable to change repayment plans and request deferment and forbearance;¹³ and (4) they face forced collections of tax refunds, Social Security benefits, and wages among other payments.¹⁴ To conduct its forced collections of federal payments like tax refunds and Social Security benefits, the Department of Education relies on a collection service run by the U.S. Department of the Treasury called the Treasury Offset Program.¹⁵

Between 2001 and 2019, the number of student loan borrowers facing forced collection of their Social Security benefits increased from at least 6,200 to 192,300.¹⁶ That is a more than 3,000 percent increase in fewer than 20 years. By comparison, the number of borrowers facing forced collections of their tax refunds increased by about 90 percent from 1.17 million to 2.22 million during the same period.¹⁷

This exponential growth of Social Security offsets between 2001 and 2019 is likely driven by multiple factors including:

• Older borrowers accounted for an increasingly large share of the federal student loan portfolio due to increasing average age of enrollment and length of time in repayment. Data from the Department of Education (which is only available since 2017), show that the number of student loan borrowers ages 62 and older, increased 24 percent from 1.7 million in 2017 to 2.1 million in 2019, compared to less than 1 percent among borrowers under the age of 62.¹⁸
• A larger number of borrowers, especially older borrowers, had loans in default. Data from the Department of Education show that the number of student loan borrowers with a defaulted loan increased by 230 percent from 3.8 million in 2006 to 8.8 million in 2019.¹⁹ Compounding these trends is the fact that older borrowers are twice as likely to have a loan in default than younger borrowers.²⁰

Due to these factors, the total amount of Social Security benefits the Department of Education collected between 2001 and 2019 through the offset program increased annually from $16.2 million to $429.7 million (when adjusted for inflation).²¹ This increase occurred even though the average monthly amount the Department of Education collected from individual beneficiaries was the same for most years, at approximately $180 per month.²²

Figure 1: Number of Social Security beneficiaries and total amount collected for student loans (2001-2019)

Source: CFPB analysis of public data from U.S. Treasury’s Fiscal Data portal. Amounts are presented in 2024 dollars.

While the total collected from Social Security benefits has increased exponentially, the majority of money the Department of Education collected has not been applied to borrowers’ principal amount owed. Specifically, nearly three-quarters of the monies the Department of Education collects through offsets is applied to interest and fees, and not towards paying down principal balances.²³ Between 2016 and 2019, the U.S. Department of the Treasury charged the Department of Education between $13.12 and $15.00 per Social Security offset, or approximately between $157.44 and $180 for 12 months of Social Security offsets per beneficiary with defaulted federal student loans.²⁴ As a matter of practice, the Department of Education often passes these fees on directly to borrowers.²⁵ Furthermore, these fees accounted for nearly 10 percent of the average monthly borrower’s lost Social Security benefits which was $183 during this time.²⁶ Interest and fees not only reduce beneficiaries’ monthly benefits, but also prolong the period that beneficiaries are likely subject to forced collections.

Forced collections are compromising Social Security beneficiaries’ financial well-being.

Forced collection of Social Security benefits affects the financial well-being of the most vulnerable borrowers and can exacerbate any financial and health challenges they may already be experiencing. The CFPB’s analysis of the Survey of Income and Program Participation (SIPP) pooled data for 2018 to 2021 finds that Social Security beneficiaries with student loans receive an average monthly benefit of $1,524.²⁷ The analysis also indicates that approximately 480,000 (37 percent) of the 1.3 million beneficiaries with student loans rely on these modest payments for 90 percent or more of their income,²⁸ thereby making them particularly vulnerable to reduction in their benefits especially if benefits are offset year-round. In 2019, the average annual amount collected from individual beneficiaries was $2,232 ($186 per month).²⁹

A recent survey from The Pew Charitable Trusts found that more than nine in ten borrowers who reported experiencing wage garnishment or Social Security payment offsets said that these penalties caused them financial hardship.³⁰ Consequently, for many, their ability to meet their basic needs, including access to healthcare, became more difficult. According to our analysis of the Federal Reserve’s Survey of Household Economic and Decision-making (SHED), half of Social Security beneficiaries with defaulted student loans skipped a doctor’s visit and/or did not obtain prescription medication due to cost.³¹ Moreover, 36 percent of Social Security beneficiaries with loans in delinquency or in collections report fair or poor health. Over half of them have medical debt.³²

Figure 2: Selected financial experiences and hardships among subgroups of loan borrowers

Source: CFPB analysis of the Federal Reserve Board Survey of Household Economic and Decision-making (2019-2023).

Social Security recipients subject to forced collection may not be able to access key public benefits that could help them mitigate the loss of income. This is because Social Security beneficiaries must list the unreduced amount of their benefits prior to collections when applying for other means-tested benefits programs such as Social Security Insurance (SSI), Supplemental Nutrition Assistance Program (SNAP), and the Medicare Savings Programs.³³ Consequently, beneficiaries subject to forced collections must report an inflated income relative to what they are actually receiving. As a result, these beneficiaries may be denied public benefits that provide food, medical care, prescription drugs, and assistance with paying for other daily living costs.³⁴

Consumers’ complaints submitted to the CFPB describe the hardship caused by forced collections on borrowers reliant on Social Security benefits to pay for essential expenses.³⁵ Consumers often explain their difficulty paying for such expenses as rent and medical bills. In one complaint, a consumer noted that they were having difficulty paying their rent since their Social Security benefit usually went to paying that expense.³⁶ In another complaint, a caregiver described that the money was being withheld from their mother’s Social Security, which was the only source of income used to pay for their mother’s care at an assisted living facility.³⁷ As forced collections threaten the housing security and health of Social Security beneficiaries, they also create a financial burden on non-borrowers who help address these hardships, including family members and caregivers.

Existing minimum income protections fail to protect student loan borrowers with Social Security against financial hardship.

The Debt Collection Improvement Act set a minimum floor of income below which the federal government cannot offset Social Security benefits and subsequent Treasury regulations established a cap on the percentage of income above that floor.³⁸ Specifically, these statutory guardrails limit collections to 15 percent of Social Security benefits above $750. The minimum threshold was established in 1996 and has not been updated since. As a result, the amount protected by law alone does not adequately protect beneficiaries from financial hardship and in fact no longer protects them from falling below the federal poverty level (FPL). In 1996, $750 was nearly $100 above the monthly poverty threshold for an individual.³⁹ Today that same protection is $400 below the threshold. If the protected amount of $750 per month ($9,000 per year) set in 1996 was adjusted for inflation, in 2024 dollars, it would total $1,450 per month ($17,400 per year).⁴⁰

Figure 3: Comparison of monthly FPL threshold with the current protected amount established in 1996 and the amount that would be protected with inflation adjustment

Source: Calculations by the CFPB. Notes: Inflation adjustments based on the consumer price index (CPI).

Even if the minimum protected income of $750 is adjusted for inflation, beneficiaries will likely still experience hardship as a result of their reduced benefits. Consumers with incomes above the poverty line also commonly experience material hardship.⁴¹ This suggests that a threshold that is higher than the poverty level will more effectively protect against hardship.⁴² Indeed, in determining an income threshold for $0 payments under the SAVE plan, the Department of Education researchers used material hardship (defined as being unable to pay utility bills and reporting food insecurity) as their primary metric, and found similar levels of material hardship among those with incomes below the poverty line and those with incomes up to 225 percent of the FPL.⁴³ Similarly, the CFPB’s analysis of a pooled sample of SIPP respondents finds the same levels of material hardship for Social Security beneficiaries with student loans with incomes below 100 percent of the FPL and those with incomes up to 225 percent of the FPL.⁴⁴ The CFPB found that for 87 percent of student loan borrowers who receive Social Security, their benefit amount is below 225 percent of the FPL.⁴⁵ Accordingly, all of those borrowers would be removed from forced collections if the Department of Education applied the same income metrics it established under the SAVE program to an automatic hardship exemption program.

Existing options for relief from forced collections fail to reach older borrowers.

Borrowers with loans in default remain eligible for certain types of loan cancellation and relief from forced collections. However, our analysis suggests that these programs may not be reaching many eligible consumers. When borrowers do not benefit from these programs, their hardship includes, but is not limited to, unnecessary losses to their Social Security benefits and negative credit reporting.

Borrowers who become disabled after reaching full retirement age may miss out on Total and Permanent Disability

The Total and Permanent Disability (TPD) discharge program cancels federal student loans and effectively stops all forced collections for disabled borrowers who meet certain requirements. After recent revisions to the program, this form of cancelation has become common for those borrowers with Social Security who became disabled prior to full retirement age.⁴⁶ In 2016, a GAO study documented the significant barriers to TPD that Social Security beneficiaries faced.⁴⁷ To address GAO’s concerns, the Department of Education in 2021 took a series of mitigating actions, including entering into a data-matching agreement with the Social Security Administration (SSA) to automate the TPD eligibility determination and discharge process.⁴⁸ This process was expanded further with new final rules being implemented July 1, 2023 that expanded the categories of borrowers eligible for automatic TPD cancellation.⁴⁹ In total, these changes successfully resulted in loan cancelations for approximately 570,000 borrowers.⁵⁰

However, the automation and other regulatory changes did not significantly change the application process for consumers who become disabled after they reach full retirement age or who have already claimed the Social Security retirement benefits. For these beneficiaries, because they are already receiving retirement benefits, SSA does not need to determine disability status. Likewise, SSA does not track disability status for those individuals who become disabled after they start collecting their Social Security retirement benefits.⁵¹

Consequently, SSA does not transfer information on disability to the Department of Education once the beneficiary begins collecting Social Security retirement.⁵² These individuals therefore will not automatically get a TPD discharge of their student loans, and they must be aware and physically and mentally able to proactively apply for the discharge.⁵³

The CFPB’s analysis of the Census survey data suggests that the population that is excluded from the TPD automation process could be substantial. More than one in five (22 percent) Social Security beneficiaries with student loans are receiving retirement benefits and report a disability such as a limitation with vision, hearing, mobility, or cognition.⁵⁴ People with dementia and other cognitive disabilities are among those with the greatest risk of being excluded, since they are more likely to be diagnosed after the age 70, which is the maximum age for claiming retirement benefits.⁵⁵

These limitations may also help explain why older borrowers are less likely to rehabilitate their defaulted student loans. Specifically, 11 percent of student loan borrowers ages 50 to 59 facing forced collections successfully rehabilitated their loans,⁵⁶ while only five percent of borrowers over the age of 75 do so.⁵⁷

Figure 4: Number of student loan borrowers ages 50 and older in forced collection, borrowers who signed a rehabilitation agreement, and borrowers who successfully rehabilitated a loan by selected age groups

Age Group	Number of Borrowers in Offset	Number of Borrowers Who Signed a Rehabilitation Agreement	Percent of Borrowers Who Signed a Rehabilitation Agreement	Number of Borrowers Successfully Rehabilitated	Percent of Borrowers who Successfully Rehabilitated
50 to 59	265,200	50,800	14%	38,400	11%
60 to 74	184,900	24,100	11%	18,500	8%
75 and older	15,800	1,000	6%	800	5%

Source: CFPB analysis of data provided by the Department of Education.

Shifting demographics of student loan borrowers suggest that the current automation process may become less effective to protect Social Security benefits from forced collections as more and more older adults have student loan debt. The fastest growing segment of student loan borrowers are adults ages 62 and older. These individuals are generally eligible for retirement benefits, not disability benefits, because they cannot receive both classifications at the same time. Data from the Department of Education reflect that the number of student loan borrowers ages 62 and older increased by 59 percent from 1.7 million in 2017 to 2.7 million in 2023. In comparison, the number of borrowers under the age of 62 remained unchanged at 43 million in both years.⁵⁸ Furthermore, additional data provided to the CFPB by the Department of Education show that nearly 90,000 borrowers ages 81 and older hold an average amount of $29,000 in federal student loan debt, a substantial amount despite facing an estimated average life expectancy of less than nine years.⁵⁹

Existing exceptions to forced collections fail to protect many Social Security beneficiaries

In addition to TPD discharge, the Department of Education offers reduction or suspension of Social Security offset where borrowers demonstrate financial hardship.⁶⁰ To show hardship, borrowers must provide documentation of their income and expenses, which the Department of Education then uses to make its determination.⁶¹ Unlike the Debt Collection Improvement Act’s minimum protections, the eligibility for hardship is based on a comparison of an individual’s documented income and qualified expenses. If the borrower has eligible monthly expenses that exceed or match their income, the Department of Education then grants a financial hardship exemption.⁶²

The CFPB’s analysis suggests that the vast majority of Social Security beneficiaries with student loans would qualify for a hardship protection. According to CFPB’s analysis of the Federal Reserve Board’s SHED, eight in ten (82 percent) of Social Security beneficiaries with student loans in default report that their expenses equal or exceed their income.⁶³ Accordingly, these individuals would likely qualify for a full suspension of forced collections. Yet the GAO found that in 2015 (when the last data was available) less than ten percent of Social Security beneficiaries with forced collections applied for a hardship exemption or reduction of their offset.⁶⁴ A possible reason for the low uptake rate is that many beneficiaries or their caregivers never learn about the hardship exemption or the possibility of a reduction in the offset amount.⁶⁵ For those that do apply, only a fraction get relief. The GAO study found that at the time of their initial offset, only about 20 percent of Social Security beneficiaries ages 50 and older with forced collections were approved for a financial hardship exemption or a reduction of the offset amount if they applied.⁶⁶

Conclusion

As hundreds of thousands of student loan borrowers with loans in default face the resumption of forced collection of their Social Security benefits, this spotlight shows that the forced collection of Social Security benefits causes significant hardship among affected borrowers. The spotlight also shows that the basic income protections aimed at preventing poverty and hardship among affected borrowers have become increasingly ineffective over time. While the Department of Education has made some improvements to expand access to relief options, especially for those who initially receive Social Security due to a disability, these improvements are insufficient to protect older adults from the forced collection of their Social Security benefits.

Taken together, these findings suggest that forced collections of Social Security benefits increasingly interfere with Social Security’s longstanding purpose of protecting its beneficiaries from poverty and financial instability. These findings also suggest that alternative approaches are needed to address the harm that forced collections cause on beneficiaries and to compensate for the declining effectiveness of existing remedies. One potential solution may be found in the Debt Collection Improvement Act, which provides that when forced collections “interfere substantially with or defeat the purposes of the payment certifying agency’s program” the head of an agency may request from the Secretary of the Treasury an exemption from forced collections.⁶⁷ Given the data findings above, such a request for relief from the Commissioner of the Social Security Administration on behalf of Social Security beneficiaries who have defaulted student loans could be justified. Unless the toll of forced collections on Social Security beneficiaries is considered alongside the program’s stated goals, the number of older adults facing these challenges is only set to grow.

Data and Methodology

To develop this report, the CFPB relied primarily upon original analysis of public-use data from the U.S. Census Bureau Survey of Income and Program Participation (SIPP), the Federal Reserve Board Board’s Survey of Household Economics and Decision-making (SHED), U.S. Department of the Treasury, Fiscal Data portal, consumer complaints received by the Bureau, and administrative data on borrowers in default provided by the Department of Education. The report also leverages data and findings from other reports, studies, and sources, and cites to these sources accordingly. Readers should note that estimates drawn from survey data are subject to measurement error resulting, among other things, from reporting biases and question wording.

Survey of Income and Program Participation

The Survey of Income and Program Participation (SIPP) is a nationally representative survey of U.S. households conducted by the U.S. Census Bureau. The SIPP collects data from about 20,000 households (40,000 people) per wave. The survey captures a wide range of characteristics and information about these households and their members. The CFPB relied on a pooled sample of responses from 2018, 2019, 2020, and 2021 waves for a total number of 17,607 responses from student loan borrowers across all waves, including 920 respondents with student loans receiving Social Security benefits. The CFPB’s analysis relied on the public use data. To capture student loan debt, the survey asked to all respondents (variable EOEDDEBT): Owed any money for student loans or educational expenses in own name only during the reference period. To capture receipt of Social Security benefits, the survey asked to all respondents (variable ESSSANY): “Did ... receive Social Security benefits for himself/herself at any time during the reference period?” To capture amount of Social Security benefits, the survey asked to all respondents (variable TSSSAMT): “How much did ... receive in Social Security benefit payment in this month (1-12), prior to any deductions for Medicare premiums?”

The public-use version of the survey dataset, and the survey documentation can be found at: https://www.census.gov/programs-surveys/sipp.html

Survey of Household Economics and Decision-making

The Federal Reserve Board’s Survey of Household Economics and Decision-making (SHED) is an annual web-based survey of households. The survey captures information about respondents’ financial situations. The CFPB relied on a pooled sample of responses from 2019 through 2023 waves for a total number of 1,376 responses from student loan borrowers in collection across all waves. The CFPB analysis relied on the public use data. To capture default and collection, the survey asked all respondents with student loans (variable SL6): “Are you behind on payments or in collections for one or more of the student loans from your own education?” To capture receipt of Social Security benefits, the survey asked to all respondents (variable I0_c): “In the past 12 months, did you (and/or your spouse or partner) receive any income from the following sources: Social Security (including old age and DI)?”

The public-use version of the survey dataset, and the survey documentation can be found at https://www.federalreserve.gov/consumerscommunities/shed_data.htm  

Appendix A: Number of student loan borrowers ages 60 and older, total outstanding balance, and average balance by age group, August 2024

Age Group	Borrower Count (in thousands)	Balance (in billions)	Average balance
60 to 65	1,951.4	$87.49	$44,834
66 to 70	909.8	$39.47	$43,383
71 to 75	457.5	$18.95	$41,421
76 to 80	179.0	$6.80	$37,989
81 to 85	59.9	$1.90	$31,720
86 to 90	20.1	$0.51	$25,373
91 to 95	7.0	$0.14	$20,000
96+	2.8	$0.05	$17,857

Source: Data provided by the Department of Education.

The endnotes for this report are available here. 

States, Suing Trump Over Gutting of Education Dept., Cite Threat of Predatory College Abuses (David Halperin)

Twenty-one Democratic state attorneys general sued President Trump and Secretary of Education Linda McMahon today, 48 hours after the Department of Education announced it was firing more than 1,300 employees, which, combined with previously Trump-Musk efforts to cull the staff, reduced the employee roster to less than half of the 4000+ person team that was working as of January.

The 53-page complaint, filed in federal court in Massachusetts, alleges that the staff reductions are illegal and unconstitutional, because they are “equivalent to incapacitating key, statutorily-mandated functions of the Department.” The AGs say that although McMahon has authority from Congress to restructure the Department, she is “not permitted to eliminate or disrupt functions required by statute, nor can she transfer the department’s responsibilities to another agency outside of its statutory authorization.”

Among the federal statutes that the state AGs contend will be undermined by this week’s staff cuts are those covering higher education, including the Department’s obligations to ensure that federal student grants and loans may be used only at colleges and universities that provide quality educations and comply with the law. The complaint notes that the Department is charged with ensuring that colleges receiving federal aid are financially responsible, that they submit to financial audits, and that they provide adequate counseling to students concerning debt management.

The AGs also note that the Department is required to review and approve private college accrediting agencies, because under the law only schools approved by Department-recognized accreditors are eligible for federal student aid. Without that process, the AGs warn, “institutions of higher education may engage in profit-seeking behaviors without relating any educational benefits to students.”

The AGs might have added that the cuts will undermine the capacity of the Department to directly investigate colleges that engage in predatory and deceptive behavior. Data released by the Department shows the largest number of layoffs — 326 people — were at the Office of Federal Student Aid (FSA), which oversees student lending and school compliance with legal obligations not to mislead and abuse students.

The Department of Education’s higher education accountability efforts over decades have often been half-hearted and ineffectual; despite the scores of staff assigned to overseeing colleges, many students, and hundreds of billions in taxpayer dollars, have been directed to deceptive, poor-quality schools that have left many students worse off than when they started. But gutting these efforts to the degree suggested by this week’s staff reductions would make matters much worse. And the first-term higher education record of President Trump, guided by Secretary of Education Betsy DeVos and her aide Diane Auer Jones, was heavily skewed in favor of slashing accountability rules and enforcement, providing no reason to be optimistic that an aim of slashing the staff this year is to improve accountability.

The cuts would also undermine core Department responsibilities in K-12 education, civil rights, disability rights, privacy rights, campus safety, and the student loan portfolio.

Secretary McMahon is publicly insisting that everything will be fine and more efficient with the reduced and reorganized staff. But, as the new lawsuit from the attorneys general notes, McMahon said on Tuesday that the firing are the “first step” on the road to a “total shutdown” of the Department.

The attorneys general who filed the complaint are from Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, Washington, Wisconsin, Vermont and the District of Columbia.

Former Department officials and education advocates plan to rally Friday morning at 8 am outside Department of Education headquarters in Washington to protest the mass firings and plans to shut down the agency.

[Editor's note: This article originally appeared on Republic Report.]  

Will Maximus and Its Subsidiary AidVantage See Cuts?

Maximus Inc., the parent company of federal student loan servicer Aidvantage, is facing growing financial and existential threats as the Trump administration completes a radical budget proposal that would slash Medicaid by hundreds of billions of dollars and cut the U.S. Department of Education in half. These proposed changes could gut the very federal contracts that have fueled Maximus's revenue and investor confidence over the last two decades. Once seen as a steady player in the outsourcing of public services, Maximus now stands at the edge of a political and technological cliff.

The proposed Trump budget includes a plan to eliminate the Office of Federal Student Aid and transfer the $1.6 trillion federal student loan portfolio to the Small Business Administration. This proposed restructuring would remove Aidvantage and other servicers from their current roles, replacing them with yet-unnamed alternatives. While Maximus has profited enormously from servicing loans through Aidvantage—one of the major federal loan servicers—it is unclear whether the company has any role in this new Trump-led student loan regime. The SBA, which lacks experience managing consumer lending and repayment infrastructure, could subcontract to politically favored firms or simply allow artificial intelligence to replace human collectors altogether.

This possibility is not far-fetched. A 2023 study by Yale Insights explored how AI systems are already outperforming human debt collectors in efficiency, compliance, and scalability. The report examined the growing use of bots to handle borrower communication, account resolution, and payment tracking. These developments could render Maximus’s human-heavy servicing model obsolete. If the federal government shifts toward automated collection, it could bypass Maximus entirely, either through privatized tech-driven firms or through internal platforms that require fewer labor-intensive contracts.

On the health and human services side of the business, Maximus is also exposed. The company has long served as a contractor for Medicaid programs across several states, managing call centers and eligibility support. But with Medicaid facing potentially devastating cuts in the proposed Trump budget, Maximus’s largest and most stable contracts could disappear. The company’s TES-RCM division has already shown signs of unraveling, with anonymous reports suggesting a steep drop-off in clients and the departure of long-time employees. One insider claimed, “Customers are dropping like flies as are longtime employees. Not enough people to do the little work we have.”

Remote Maximus employees are also reporting layoffs and instability, particularly in Iowa, where 34 remote workers were terminated after two decades of contract work on state Medicaid programs. Anxiety is spreading across internal forums and layoff boards, as workers fear they may soon be out of a job in a shrinking and increasingly automated industry. Posts on TheLayoff.com and in investor forums indicate growing unease about the company’s long-term viability, particularly in light of the federal budget priorities now taking shape in Washington.

While Maximus stock (MMS) continues to trade with relative strength and still appears profitable on paper, it is increasingly reliant on government spending that may no longer exist under a Trump administration intent on dismantling large parts of the federal bureaucracy. If student loan servicing is eliminated, transferred, or automated, and Medicaid contracts dry up due to funding cuts, Maximus could lose two of its biggest revenue streams in a matter of months. The company’s contract with the Department of Education, once seen as a long-term asset, may become a political liability in a system being restructured to reward loyalty and reduce regulatory oversight.

The question now is not whether Maximus will be forced to downsize—it already is—but whether it will remain a relevant player in the new federal landscape at all. As artificial intelligence, austerity, and ideological realignment converge, Maximus may be remembered less for its dominance and more for how quickly it became unnecessary.

The Higher Education Inquirer will continue tracking developments affecting federal student loan servicers, government contractors, and the broader collapse of the administrative state.

Triumphalism in Decline: A Critique of “They Attack Because We’re Strong”

In his recent Inside Higher Ed opinion piece, “They Attack Because We’re Strong,” Frank Fernandez argues that American higher education is under fire not because it is failing, but because it is too powerful and influential. He calls for a long-view perspective that celebrates the accomplishments of U.S. colleges and universities over the past century. But his essay—well-intentioned as it may be—reads less as a sober reflection and more as institutional nostalgia, untethered from the brutal realities of the present.

Fernandez’s triumphalism overlooks or distorts several truths. It is true that U.S. universities have had moments of undeniable achievement: scientific breakthroughs, professional training, and expansion of access. But to say “higher education won” is to ignore the hollowing out of public trust, the corporatization of academia, and the structural harm inflicted on millions of students and contingent workers. If this is victory, it has come at a staggering cost.

“Higher Education Won”? Who Lost?

One of the glaring absences in Fernandez’s narrative is any sustained acknowledgment of the student debt crisis—more than $1.7 trillion in outstanding loans that have left borrowers in financial limbo for decades. The author does not address how rising tuition, stagnating wages, and declining public investment have turned the promise of higher education into a burden for the working class and communities of color.

Nor does he wrestle with the implications of an adjunct majority workforce. Most college instructors today work under precarious contracts with little pay, no benefits, and no job security. This is not a sign of institutional strength. It is a labor crisis.

The rhetorical move to compare today’s struggles with the early 20th century glosses over the fact that the institutions that once expanded access are now increasingly exclusionary. Public flagships and elite privates alike are doubling down on selectivity, building billion-dollar endowments, and investing in luxury amenities while cutting humanities departments and hiking student fees.

If the past 100 years have brought expansion, the past 20 have brought erosion.

Legitimacy Cannot Be Willed into Being

Fernandez concedes that “our challenge in this new era is primarily one of legitimacy.” But he frames this as a problem of perception, not performance. He cites faculty critiques over gendered language in a voter turnout study as a distraction, implying that the real work of the academy is hindered by too much internal debate. But that line of thinking presumes that legitimacy can be restored by tone and unity, not by systemic reform.

Legitimacy is not gained by declaring relevance—it is earned through material impact. That means resisting extractive tuition models, ending the abuse of contingent labor, and seriously confronting how the industry has facilitated racial and economic stratification.

It also means acknowledging that some of the conservative critiques—about administrative bloat, about ideological insularity, about weak accountability mechanisms—are not entirely without merit. These issues are not the inventions of “Trump acolytes,” but of decades of elite capture and mission drift.

A House Divided

Perhaps most troubling is Fernandez’s call for national solidarity among faculty and institutional leaders, modeled after the early AAUP. But today’s higher education system is profoundly stratified. Community colleges face declining enrollments and funding cliffs. HBCUs and regional publics have long been underresourced. For-profit colleges exploit the most vulnerable. And elite institutions continue to hoard wealth and status.

There is no shared struggle here. There is no unified front. The idea that faculty from a state university in Texas or an adjunct at a California community college share the same institutional mission as leadership at Princeton or Stanford is a comforting illusion. Solidarity will not emerge without reckoning with this inequality.

Conclusion

Fernandez asks us to see the attacks on higher ed as a signal of strength. But what if these attacks are, in part, the result of decades of institutional failure? What if irrelevance is not imposed from the outside but cultivated from within—through inaccessibility, arrogance, and systemic exploitation?

If higher education is to have a future worth defending, it will require more than collective nostalgia and appeals to tradition. It will require a commitment to equity, transparency, and accountability—not just to the ideals of the past, but to the people failed by the system today.

Sources:

• U.S. Department of Education. “Student Loan Portfolio Summary.” Federal Student Aid.

• AAUP. “Data Snapshot: Contingent Faculty in US Higher Ed.”

• Center for American Progress. “The Cost of Cuts: A Look at the Ongoing Crisis in Public Higher Education.”

• Georgetown University CEW. “The College Payoff.”

• The Century Foundation. “How Public Colleges Have Been Undermined.”

• National Center for Education Statistics (NCES). Integrated Postsecondary Education Data System (IPEDS).