Trump's overhaul of student loans, from collections to new repayment rules

In March 2025 Trump ordered changes to Public Service Loan Forgiveness that would disqualify employees of nonprofits deemed to have engaged in "improper" activities,^[4] and he said student loans might move to the Small Business Administration as he worked to shut down the Education Department.^[7] In April the department said it would resume collections on defaulted loans, including wage garnishment,^[8] and it began collecting in May.^[1] House Republicans proposed new borrowing caps,^[9] and the administration later explored selling the federal loan portfolio to private companies.^[10]

In October 2025 the administration agreed to resume forgiveness for about 2.5 million borrowers in certain repayment plans after a lawsuit by the American Federation of Teachers.^[11] In December it announced a deal with seven states to end SAVE,^[2] and said it would begin garnishing wages of defaulted borrowers in 2026, a plan it then delayed.^[12][13] In March 2026 the Education Department began handing part of the portfolio to the Treasury Department.^[3] New repayment rules took effect on July 1,^[14] the day after a judge blocked the new forgiveness restrictions,^[5] and another judge blocked lower loan limits for some graduate health programs.^[15] In August the department agreed to erase about $11 billion in debt for more than 170,000 borrowers who said their schools defrauded them, after losing in an appeals court.^[16]