Mass. student loan borrowers in default prep for debt collections to resume

The Department of Education will resume debt collections for federal student loan borrowers in default on Monday, during a critical moment for higher education and affordability in Massachusetts and across the country.

The Trump administration said last month that it "can and will" take the wages, pensions and tax refunds of indebted borrowers as soon as this summer.

The Department of Education estimates that nearly 25% of the federal student loan portfolio — or roughly 9 million people nationally — have already defaulted on their student loans or are on the verge of default. (In most cases, the government defines default as when a student loan borrower has not made a monthly payment in over 270 days.)

Education Trust Massachusetts State Director Jennie Williamson told MASSterList about 13% of Massachusetts residents (more than 900,000 people) have some sort of federal student loan debt. It's not clear how many of those are in default.

Williamson also said the average student loan debt in Massachusetts is around $35,000.

Williamson said the move will hurt people already struggling with rising costs and disproportionately impact low-income families and families of color — especially Black borrowers, who graduate with more student debt than any other group.

"Policies like this threaten to discourage future generations from pursuing higher education altogether," Williamson said. "And the fear of being trapped in debt, with no way out, especially if debt can lead to wage garnishment, will likely deter some students [from] enrolling."

"... the fear of being trapped in debt, with no way out, especially if debt can lead to wage garnishment, will likely deter some students [from] enrolling."

Jennie Williamson

May 5 will end the roughly five-year pause on collecting defaulted federal student loans, put in place during COVID-19 as temporary relief for borrowers. The Biden administration's one-year "on-ramp" period — which allowed borrowers to resume payments but protected them from credit-damaging consequences of those missed — ended last fall.

"My biggest concern is that it's happening at the same time that [the administration has] really decimated staff at the Department of Education, and there are a lot of questions about what options borrowers have for an affordable repayment system," Williamson said.

The higher education sector is already struggling under the Trump administration, which has frozen and revoked millions in grants from colleges across Massachusetts and upped the ante on universities like Harvard.

House Republicans also unveiled a plan this week to overhaul the federal student loan system and save $330 billion in the process.

The early-stage plan includes proposals to eliminate existing income-based repayment plans (like the popular "SAVE" plan, which is currently on hold) and alter Pell Grant requirements — moves Williamson said would significantly endanger financial aid accessibility and higher ed affordability.