The Education Department issued guidance on Feb. 18 urging colleges to implement practices to reduce student loan delinquency and default rates or risk losing access to federal student aid.
In a statement, the department cited new data showing that more than 1,800 colleges, universities, and other higher education institutions have loan nonpayment rates of 25 percent or more.
“Student borrowers have an obligation to repay their loans, but institutions also share a responsibility to ensure their students are prepared to enter repayment and understand the consequences of nonpayment,” Education Department Undersecretary Nicholas Kent said.
“Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans. It’s time for institutions to step up or risk losing access to federal student aid.”
The Education Department called on colleges to encourage at-risk or delinquent borrowers to enroll in or prepare for the Repayment Assistance Plan, a new federal student loan repayment plan that is set to begin on July 1.
The department also urged institutions to reevaluate “internal practices to promote responsible borrowing and successful repayment” by informing defaulted student borrowers about opportunities to rehabilitate their student loans, enhancing entrance counseling about student loans, and examining financial aid practices in response to recent legislative changes.
Nearly 43 million people in the United States have federal student loan debt, amounting to more than $1.6 trillion in total, the Congressional Research Service said in a report released in February 2025.
In May 2025, the Trump administration ended the COVID-19 pandemic-era pause on student loan payments and began collecting on defaulted debt by withholding tax refunds and other federal payments to borrowers.
The move ended a period of leniency for student loan borrowers. Payments restarted in October 2023, before the Biden administration extended the leniency period by one year.
Since March 2020, no federal student loans had been referred for collection, including those in default, until the Trump administration’s changes earlier this year.
Millions of borrowers are considered in default, meaning that they are 270 days past due on their payments. The department must give borrowers 30 days’ notice before their wages can be garnished.
Earlier this year, the Education Department announced that it was delaying the process of garnishing the wages of student loan borrowers who are in default in a bid to align its policies with provisions under the Trump administration-backed One Big Beautiful Bill Act.
“After the Biden Administration misled borrowers into believing their student loans would not need to be repaid, the Trump Administration is committed to helping student and parent borrowers resume regular, on-time repayment, with more clear and affordable options, which will support a stronger financial future for borrowers and enhance the long-term health of the federal student loan portfolio,” Kent said in a statement at the time.
