Trump administration restarts involuntary collections on student loan debt
Collections had been on pause since March 2020, as a result of the COVID-19 pandemic, and the restart is expected to impact roughly 5.3 million borrowers currently in default on their federal student loans.
'As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students,' Education Secretary Linda McMahon said in a statement.
Advertisement
'For too long, insufficient transparency and accountability structures have allowed US universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market,' she added.
3 McMahon said she plans to publish the names of the schools with the highest student loan default rates.
Getty Images
On Monday, approximately 195,000 defaulted student loan borrowers received a 30-day notice from the Department of Treasury, informing them that their federal benefits will be subjected to the Treasury Offset Program, which collects debts by garnishing federal and state payments, such as federal tax refunds.
Advertisement
Offsets will begin in early June, according to the Education Department, and later this summer, all 5.3 million defaulted borrowers will receive a notice from Treasury that their earnings will be subject to administrative wage garnishment.
On the same day collections resumed, McMahon issued a 'Dear Colleague Letter' to institutions of higher education reminding them of their obligation to support student loan borrowers under the Higher Education Act of 1965.
3 The Trump administration will start garnishing the wages of borrowers in default later this summer.
Getty Images
'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,' McMahon wrote.
Advertisement
The education secretary asked universities to 'refocus and expand' efforts at advising and counseling students on borrowing money from the federal government and to provide 'clear and accurate information about repayment to borrowers through entrance and exit counseling.'
McMahon noted that under the Higher Education Act, schools are required to keep default rates 'low' and warned that schools could 'lose eligibility for federal student assistance' if defaults exceed 40% in a single year or 30% for three straight years.
'[W]e 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 [default rates] next year and lose access to federal student aid,' McMahon wrote.
3 The Trump administration warned colleges and universities Monday that if too many of their graduates are in default, they could be cut off from access to federal financial aid for students.
Getty Images
Advertisement
The Trump administration also warned colleges that the Education Department will soon begin publishing loan non-payment rates broken down by university.
'The Department is committed to overseeing the federal student loan programs with fairness and integrity for students, institutions, and taxpayers,' McMahon wrote. '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.'
She indicated that the data will be made public later this month.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Post
7 minutes ago
- New York Post
Trump gives ‘25%' chance of Putin summit ending in failure
WASHINGTON — President Trump said there's a 25% chance that his summit with Russian President Vladimir Putin will end in failure. Still, the dealmaker-in-chief insisted that he is the only reason the Russian dictator is coming to the table in an interview with Fox Radio host Brian Kilmeade. 'I think [Putin] wants to get it done. I really feel he wanted the whole thing. I think if it weren't me, if it was somebody else, he would not be talking to anybody,' Trump said. 'I'm the toughest one that he's ever had to deal with. He's never had to deal with anybody like me.' Trump also said that a successful meeting on Friday could result in him staying in Alaska to host a follow-up meeting featuring Putin and Ukrainian President Volodymyr Zelensky. 4 President Trump said Thursday that his Friday summit with Vladimir Putin has a 25% chance of failure. Getty Images 'I believe now he's convinced that he's going to make a deal' to end the long-running conflict, the president continued, adding that, 'I'm going to know very quickly.' Trump described the high-profile encounters as a preliminary step toward peace, saying, 'I don't know that we're going to get an immediate ceasefire, but I think it's going to come.' 'Depending on what happens with my meeting, I'm going to be calling the president, Zelensky, and let's get him over to wherever we're going to meet,' he told Kilmeade. 'I don't know where we're going to have the second meeting, but we have an idea of three different locations and we'll be including the possibility, because it would be by far the easiest, of staying in Alaska,' he continued. 'If it's a bad meeting, I'm not calling anybody, I'm going home.' 4 Putin launched a full-scale invasion of Ukraine in February 2022. 4 Trump said Ukraine's Volodymyr Zelensky, right, may be invited to come to Alaska if talks go well. Bernd Elmenthaler/Future Image/INSTARimages 4 Trump previously had a high-profile summit with Putin in Helsinki, Finland, in July 2018. AFP via Getty Images Many details of the Alaska summit remain unknown just a day ahead of time, including whether the leaders will jointly address the press afterward. 'I would say I'll have a press conference in either event,' Trump said. 'If it's negative, I'll have a press conference to say that the war is going to go on and these people are horribly going to continue to shoot each other and kill each other, and I think it's a disgrace, and I'll head back to Washington. 'Or I'll have a press conference that's positive.' Trump acknowledged he has been overly optimistic in the past. 'I've stopped six wars this year. This was going to be one of my easy ones, but it never works out that way. This turns out to be probably the most difficult,' he said.
Forbes
8 minutes ago
- Forbes
Another New Feadship Superyacht Is Delivered In 2025
Larger and more innovative superyachts seem to be delivered to new owners with more regularity than ever before. But there are several good reasons for that. One of the simplest is that many of the large yachts that are being launched now were conceived when all of us were locked down at home—dreaming of blue water and wide-open horizons—during the Covid pandemic. And I believe so many yachts were conceived during the Covid is simply because people realized that being able to safely, privately, and yes, comfortably escape the stress of everyday life with their family and friends may be the greatest luxury in the world. Now, I may be a bit biased but, I think there's no better way to escape the stress of the everyday life than onboard a superyacht that's been meticulously designed and built by teams of creative and talented naval architects, artists, technicians, carpenters, and all the other experts that contribute to building these spectacularly unique vessels. The newly launched Feadship Stella M that was designed by Studio De Voogt (and previously only known by her code name Project 827) is a perfect example. She features clean exterior lines and numerous decks designed to provide lots of wide-open, light-filled interior space. A dedicated owner's deck offers a panoramic and secluded master stateroom with wrap-around glass, direct access to a private breakfast area, and my personal favorite—a hot tub. This secluded level is made possible by the raised pilothouse. On the main deck aft, the saloon is wrapped in floor-to-ceiling glass, and opens onto an large aft deck area with a 23-foot-long pool and lots of comfortable places to lounge in the sun. The guest accommodation areas are located on the main deck too. Four staterooms and two VIP suites offer flexible comfort, with the VIPs able to combine into a full-beam suite. Beneath the aft deck, a wellness space sits just steps from the swim platform and is easily accessible to everyone on board. Since the project was developed in close collaboration with Burgess, who represented the owner throughout the build, and Hugo-Morgan Harris as technical representative, Feadship Sales Director Maarten Janssen was understandably proud at the launch. 'The successful delivery of Stella M reflects seamless collaboration between the owner, the yard, design teams, technical experts, and broker,' he said. 'Every detail was shaped by a shared ambition to create something exceptional. The owner brought a clear vision and personal touch to the project, contributing thoughtfully throughout. Stella M is a refined and distinctive yacht, ready to begin her first Mediterranean season.' And Stella M is not the only new Feadship to be launched this year. The distinctly-styled Valor that's well over 300-feet long made her entrance earlier this spring too. Watch this space.
Forbes
an hour ago
- Forbes
As Elon Musk Invests In Optimus' Robot, What Value Do Robots Really Bring?
When Elon Musk says Tesla will one day be worth more than Apple and Saudi Aramco combined, he's not talking about electric cars. He's talking about robots. At Tesla's annual shareholder meeting, Musk doubled down on his bet that Optimus — the company's humanoid robot, seen cozying up to Kim Kardashian in a photo shoot last spring — could one day power a $25 trillion market cap. That's right: trillion with a 'T.' It's an audacious vision, built on the belief that general-purpose robots will not just complement human labor but replace vast swaths of it. He has projected hitting sales of a million humanoids a year within five years, priced under $30,000 each, making them a seemingly irresistible source of replacement labor for flesh and blood humans. But before investors recalibrate their spreadsheets, it's worth asking a more fundamental question: What are robots actually good for? BEIJING, CHINA - APRIL 19: Humanoid robot Kuavo falls in the Beijing E-town Half-Marathon and Humanoid Robot Half-Marathon on April 19, 2025 in Beijing, China. Tiangong Ultra, a humanoid robot, ran across the finish line while securing the first position during the Humanoid Robot Half-Marathon. (Photo by Song Jiaru/VCG via Getty Images) VCG via Getty Images Shortly after Musk's bold prediction, China hosted a widely publicized ' robot marathon ' to showcase the athletic prowess of humanoid robotics. Dozens of bipedal machines shuffled across a track in full view of TV cameras. Most promptly fell over. Others sputtered forward in stiff, jerky motions. A few actually made it to the finish line. The spectacle was unintentionally hilarious, providing a sense of relief to those who worry that technology is advancing faster than regulations can be drawn up. But the videos from the half-marathon proved that, despite tens of billions in investment, even the most basic functions of mobility and dexterity remain elusive for general-purpose robots. This is not to say that they aren't getting better. They are. And quickly. But there's a meaningful difference between a humanoid robot that can wave in a demo video and one that can reliably sew a button, deliver a package in the rain, or assist a senior citizen in the bathroom — all without human intervention or constant and expensive maintenance. For all our Jetsons-fueled fantasies of household helpers, the fact is that the more realistic short-term wins for robots will come in controlled environments. Think: factory lines, warehouses, clean rooms, and hospitals — places where the tasks are repetitive, the variables are limited, and the ROI can be tightly measured. This is why Amazon, a company with no shortage of capital or AI talent, has largely shunned humanoid form factors. Its investments have focused on task-specific robotics like mobile carts, pick-and-place arms, and automated sorters, with a robot fleet one-million strong laboring in its warehouses as of June. In China, companies like DJI and Huawei are leaning into robotics for logistics, surveillance, and industrial automation, areas where the technical hurdles are lower and the use cases immediate. Humanoid robots are still chasing a (literally) moving target: the complexity of the human body. And that's not a race you win with iterative updates. But the challenges facing robotic adoption are not just technical. They're also political, regulatory and cultural. In the United States, the specter of labor displacement looms large. Since President Trump campaigned on the idea of revitalizing domestic industries, many people are waiting for him to deliver on his promise of bringing back jobs to American workers, particularly in manufacturing, mining and other traditionally labor-intensive sectors. The introduction of advanced robotics into these industries complicates that promise. How do you deploy robots in a way that doesn't provoke backlash from unions, policymakers, or a public already anxious about AI's impact on jobs? China, by contrast, has been more aggressive. Facing a shrinking labor force and rising wages, the government has embraced automation as a necessity rather than a luxury. Subsidies for factory automation, pilot programs for robotic caregivers, and fast-tracked approval processes are signs that China views robots not just as a technological opportunity, but as an answer to long-term demographic decline. Humanoid robots manufactured by UBTECH Robotics are already being deployed on a trial basis to assemble Apple phones for Foxconn and electric vehicles for Zeeker and BYD. Leju Robots' humanoids have been used to dole out medicine in eldercare facilities. That said, China's robot revolution has stayed mainly within industrial bounds. Consumer-facing robots remain rare and, as the marathon made clear, still far from mass-market ready. SHANGHAI, CHINA - SEPTEMBER 5, 2024 - Spectators look at Tesla's Core Technology Optimus humanoid robot and a cybertruck off-road station car at the Bund Conference in Shanghai, China, September 5, 2024. (Photo credit should read CFOTO/Future Publishing via Getty Images) CFOTO/Future Publishing via Getty Images This is the geopolitical wildcard. On one hand, the United States has the lead in core technologies: chips ( Nvidia ), software ( OpenAI ), and platform companies like Tesla and Amazon willing to make enormous and speculative bets. On the other hand, China dominates hardware manufacturing, has a more unified industrial policy, and may have fewer legal or ethical constraints on robot deployment. China's National People's Congress announced a 1 trillion RMB ($138 billion US) investment fund in robotic development this spring, and the country has already displaced Germany as the leader in industrial robotics, with 54% of global installations, according to the International Robot Federation . Robots have also become a cultural phenomenon in China, with Unitree's robots dancing alongside human dancers on CCTV to celebrate the Spring Festival , facing off in a kickboxing contest in May, and playing in a soccer tournament in June. While many of these stunts seem goofy, they have caught the attention of Tesla's Elon Musk, who commented on a recent earnings call that 'I'm a little concerned on the leaderboard [of top robotics companies], ranks 2 through 10 will be Chinese companies.' Meanwhile, Japan and South Korea have decades of expertise in robotics research and development and are quietly advancing in areas like caregiving and surgical assistance. Investors are watching closely, and VC capital is flowing into startups like Figure AI, Sanctuary AI, and Agility Robotics, each promising humanoids with varying degrees of autonomy. Over $100 billion in VC funding has flowed into robotics startups since 2018, with about half of that going to U.S.-based companies and a quarter to those based in China. Analysts at Citigroup recently predicted that the global population of robots will explode to 1.3 billion by 2035 and 4 billion by 2050 - making Musk's predictions seem circumspect by comparison. Citigroup expects humanoid robots to be deployed in households, manufacturing and construction sites, and hospitality as replacements or enhancements to human labor. The Promise and the Pitfalls Let's be clear: Musk's $25 trillion vision is not impossible, but it's also not imminent. It assumes not only that Tesla will succeed in building and deploying humanoid robots at scale, but it will dominate a category that is only just coming into existence. The reality is that we're still early. Robots are coming, but the path from prototype to productive form is longer than most headlines suggest. So, what are humanoid robots good for? Right now, they're good at opening wallets, raising valuations, and firing our collective imagination. In the future, they may be good for changing the very nature of labor, economics and even geopolitics. But for investors and policymakers, the challenge is to identify and back the players who will be able to walk as well as they talk.
