White House to go after pensions, wages and tax returns to claw back student loan debt

WASHINGTON — The Trump administration announced Tuesday that it would seize wages and go after the pensions of those who refuse to repay federal student loans they defaulted on.

“The government can and will collect default in federal student loan debt by withholding money from borrowers, tax refunds, federal pensions and even their wages,” White House press secretary Karoline Leavitt told reporters in her weekly briefing.

The Education Department had announced a day earlier it would be pursuing wages and tax refunds, but did not specifically state federal pensions would also be included.

The White House will restart the federal government’s “involuntary” collection program — that was paused under former President Joe Biden — on May 5.

The number of individuals defaulting on their student loans could reach 10 million in a few months, the Education Department said in a statement on Monday — accounting for 25% of federal loan portfolios.

All borrowers who have defaulted on their loans will receive a notice in two weeks informing them of the upcoming collection process.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Secretary of Education Linda McMahon said in a statement.

“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear.

“Hundreds of billions have already been transferred to taxpayers. Going forward, 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.” 

A loan is considered in default if the borrower misses payment for 270 days, or about 9 months.

Under the Treasury Offset Program, the government has the right to withhold 100% of defaulted borrowers’ tax returns, 15% of federal salary and 15% of Social Security.

Federal loan borrowers currently owe over $1.6 trillion in student debt.

The Trump administration has long said taxpayers should not be responsible for paying off other people’s loans — in response to the Biden administration’s proposal to forgive $400 billion in student loans.

“We must get our fiscal house in order and restore common sense to our countries. If you take out a loan, you have to pay it back — very simple,” Leavitt said.