Steven Nelson and Josh Christenson write for the New York Post about a significant development for people with student loan debt.
Education Secretary Linda McMahon is sending a letter to 43 million Americans with student loans — about 9 million of whom are in default — to notify them that the Treasury Department is taking over debt collection, The Post has learned.
The letter describes the transfer of responsibilities as a way to protect taxpayers by improving the efficiency of the collection process — after loan repayments were paused through much of the Biden administration, with borrowers protected from delinquency through September 2024.
“For too long, Americans have shouldered the consequences of poor leadership and persistent mismanagement of our federal student aid portfolio. Today’s actions reclaim integrity and accountability for you, the American people,” McMahon writes in the letter shared with The Post ahead of the mass mailing.
There’s currently $1.7 trillion in outstanding student debt — roughly 25% of which, or $425 billion, was believed to be in default as of last year.
The move gives new responsibilities to Treasury Secretary Scott Bessent, whose department’s Bureau of the Fiscal Service is taking on the collection role.
The Education Department, McMahon wrote, “has proven woefully unable to collect on debt owed to taxpayers.”
“The previous Administration created a web of confusion, leaving borrowers uncertain about their repayment obligations, and lacking the tools and support to get back on track,” the education secretary wrote.
“The status quo has failed our students and mired our nation in financial stalemate. It’s time for an entity with deep experience in finance and banking to support this major fiscal responsibility.”
McMahon wrote that the FAFSA form for students seeking financial aid won’t be altered and that borrowers currently making loan repayments should continue to do so through their normal loan-serving company.
