Trump administration officials are preparing to penalize millions of Americans in default on their federal student loans next year, The Washington Sun reported, citing five people familiar with the matter. The Treasury Department is moving forward with plans to hire private debt collectors, possibly as soon as November, three of the sources said, and those plans are unlikely to be announced before the midterm elections.
According to the Treasury's Sept. 30 release - there are more than 5 million borrowers who have been in default for over six years and another 5 million who entered default in less than a year.
The plan would revive collections the administration shelved this year. As we noted in January, the Education Department said it would begin garnishing wages in January, with up to 15% of a borrower's after-tax income at stake and about 1,000 notices expected the first week. That same month, however, ABC News reported that the department paused both wage garnishment and Treasury Offset Program collections - tax refund seizures
