Resumption of Collections:
Today, May 5, 2025, the Department of Education is restarting involuntary collections for borrowers with defaulted federal student loans. This means the government can now begin garnishing wages and withholding tax refunds to recover the debt. Borrowers in default should have received email notifications about this in the past couple of weeks.
Project 2025's Potential Impact:
Project 2025's proposed changes to student loan policies could exacerbate these existing disparities:
Existing Disparities:
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Higher Debt Burden: Students of color, particularly Black and Hispanic/Latino students, are more likely to borrow for college and tend to borrow larger amounts than their white peers. This is often due to factors like historical wealth disparities, lower family incomes, and less access to financial resources.
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Repayment Challenges: Students of color also face greater challenges in repaying their loans. They often experience higher unemployment rates and lower average incomes, making it harder to manage their debt obligations.
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Privatization: Shifting student loans to the private sector could lead to higher interest rates and less favorable repayment terms, making it even more difficult for students of color to afford their education.
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Elimination of Federal Programs: Reducing federal involvement in student loans could eliminate important safeguards and protections for borrowers, disproportionately harming those who are already vulnerable.
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Changes to Repayment Plans: Proposals to alter or eliminate income-driven repayment (IDR) plans could increase monthly payments, placing a greater financial burden on borrowers of color who are more likely to have lower incomes.
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Elimination of PSLF: The elimination of Public Service Loan Forgiveness would particularly harm students of color who are more likely to work in public service sectors, which often provide lower salaries.
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Project 2025's student loan proposals could create additional barriers to higher education and further disadvantage students of color, potentially widening the racial wealth gap