Former President Joe Biden’s administration aimed to lower Americans’ monthly student debt payments and maximize loan forgiveness opportunities. President Donald Trump’s administration seems more focused on ensuring all those loans are repaid.
A harsh reality could be on the way for borrowers who have gotten used to leeway in the federal student loan system, or are struggling to make payments: An estimated 1 in 12 Americans will face “negative” financial consequences in the coming months, finds a new report by the University of California Student Law Initiative, researched in conjunction with the left-leaning nonprofit Student Borrower Protection Center.
Some student loan borrowers are already experiencing credit score drops. Others will face involuntary debt collection this summer, the Department of Education announced. Many of the 43 million Americans with student debt are already struggling financially: Nearly 30% of borrowers report, at some point, having gone without food, medication or other necessities to make their student loan payment, a 2024 Consumer Financial Protection Bureau survey found.
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In response to a request for comment, a U.S. Department of Education spokesperson pointed CNBC Make It to a statement made by Secretary of Education Linda McMahon on April 21.
“The Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” McMahon said.
The University of California report says that three particular groups, totaling 20 million student loan borrowers, risk deepening their financial challenges this summer:
Borrowers behind on monthly payments
Over 7 million borrowers were behind on their monthly payments as of March 31, according to Department of Education data. Most of them — nearly 6 million — were between 91 and 180 days past due on their payments, the data says. The rest were at least 31 days behind.
Once a loan is 90 days past due, the loan servicer reports the delinquency to the credit reporting bureaus, which can lower the borrower’s credit score and leave a negative mark on their credit report. Trump’s first presidential administration paused delinquency reporting to credit bureaus, along with monthly payments, in March 2020 when the Covid-19 pandemic hit.
Monthly payments resumed in October 2023 under the Biden administration, and delinquency reporting resumed in January 2025 under Trump. The move may have happened regardless of the 2024 presidential election’s results: In October, the Biden administration announced plans to resume delinquency reporting in January.
Nine million borrowers could see their credit scores drop from delinquency reporting, according to analysis from Federal Reserve Bank of New York economists. Since January, some borrowers on social media have reported seeing declines of more than 100 points, which could make it more difficult for them to get approved for new loans or credit cards, get a lease on a home or activate utilities services.
If you’re delinquent on your loan, paying your past-due amount or getting on a payment plan can bring your account into good standing.
Borrowers who are in default
Loans that go 270 days past due without a payment are considered in default. More than 5 million borrowers have at least one federal loan in this situation, according to the researchers’ analysis of Federal Student Aid data.
Before the pandemic, those borrowers would’ve seen their tax refunds and federal benefits, including portions of their Social Security checks, seized by the federal government in a process known as “Treasury offset.” Additionally, their wages would’ve been be subject to garnishment, meaning the government would take money — up to 15% of disposable income — out of their paychecks to repay the defaulted loans.
Trump’s first administration paused Treasury offset and wage garnishment during the pandemic. The Biden administration maintained those pauses, planning to restart Treasury offset in July 2025 and wage garnishment in October 2025 — with an emphasis on trying to decrease the number of impacted borrowers — according to a January 13 Department of Education memo.
The Trump administration instead restarted Treasury offsets in early May, notifying borrowers whose federal benefits may be impacted. People facing wage garnishment will be contacted later this summer, the Department said in an April 21 press release. The federal government is required to provide borrowers with a 60-day notice before reducing their benefits or wages.
If you fall into either category, your benefits or wages will return to normal once your debt is repaid, you enter a rehabilitation agreement that includes a payment plan or you request a hearing to determine whether you’re exempt from some or all wage garnishment.
Borrowers enrolled in the SAVE plan
At least 8 million borrowers are currently in an administrative forbearance because they enrolled in the Saving on a Valuable Education (SAVE) plan, an income-driven repayment plan created under the Biden Administration. That plan is temporarily blocked by federal courts after multiple Republican-led states sued to prohibit its enactment.
These borrowers may not be required to make payments for now. But when they are, their payments will likely be higher than they’d have been on the SAVE plan. Under currently available income-driven repayment plans, borrowers’ monthly payments can be up to 20% of their discretionary income, compared with a 5% cap under the SAVE plan.
The SAVE plan’s legal challenges began during the Biden administration, which sought to defend it in court — something the Trump administration is unlikely to do.
In Trump’s “big, beautiful” tax bill, which narrowly passed the U.S. House of Representatives on Thursday, Republicans proposed creating a new income-driven repayment plan and eliminating the existing repayment options for loans disbursed on or after July 1, 2026.
The proposal — which includes a new repayment path called the Repayment Assistance Plan — would set minimum monthly payments at $10 for low-income borrowers, as opposed to no monthly payments under the SAVE plan. It’s unclear whether the Repayment Assistance Plan will be included in the version of the bill that gets voted on in the Senate.
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