Democrats urge Trump to cancel student debt and halt collections as 9 million borrowers face default
Trump faces renewed pressure to cancel student debt as lawmakers warn of record default crisis
More than 60 Democratic lawmakers are urging the Trump administration to provide student-debt relief to eligible borrowers and halt planned collection measures, arguing that millions of Americans face worsening financial hardship as student-loan defaults reach record levels.
In a June 7 letter to Education Secretary Linda McMahon, lawmakers led by Elizabeth Warren, Jeff Merkley, Ayanna Pressley, and André Carson warned that the country is experiencing “the largest student loan default and delinquency crisis on record.”
The lawmakers are calling on the Department of Education to accelerate debt cancellation programs, clear repayment application backlogs, continue the pause on involuntary collections, and stop the planned transfer of defaulted student-loan accounts to the Treasury Department.
Democratic lawmakers push for immediate debt relief
The coalition of 62 members of Congress is asking the Education Department to discharge loans for borrowers who already qualify for existing debt-relief programs.
Those programs include Public Service Loan Forgiveness (PSLF), Total and Permanent Disability (TPD) discharge, income-driven repayment (IDR) forgiveness, borrower defense to repayment, and closed-school discharge programs.
“It is unacceptable that debt cancellation that borrowers are legally entitled to has been delayed and denied,” the lawmakers wrote.
The group requested that the department provide written responses to their concerns by June 22.
Student-loan defaults reach record levels
The lawmakers pointed to recent analyses showing a dramatic increase in student-loan distress.
According to figures cited in their letter, nearly 9 million borrowers are currently in default. Of those, roughly 3.6 million borrowers entered default during the first year of the Trump administration, averaging one borrower defaulting every nine seconds throughout 2025.
The letter also notes that one in four borrowers with student-loan payments due is currently delinquent, marking a significant deterioration from conditions that existed during the Biden administration’s repayment transition period.
The lawmakers argue that several administration actions have contributed to the worsening crisis.
Among the concerns raised are restrictions on affordable repayment options, reduced access to debt relief programs, and what lawmakers describe as insufficient outreach to borrowers who are at risk of delinquency or default.
“The Trump administration’s failure to meaningfully address the default crisis has raised Americans’ costs and tanked borrowers’ ability to access credit,” the lawmakers wrote.
They also warned that upcoming repayment changes could place additional financial strain on borrowers already struggling to make payments.
July 1 student-loan overhaul approaches
The pressure campaign comes less than a month before major changes to the federal student-loan system are scheduled to take effect on July 1.
The overhaul includes new repayment plans, loan caps, and the end of the SAVE repayment program. Borrowers currently enrolled in SAVE are expected to transition into alternative repayment options.
Following the Supreme Court’s 2023 decision striking down President Biden’s broad student loan forgiveness plan, the administration introduced the SAVE repayment plan, which reduced monthly payments for many borrowers and offered a faster path to loan forgiveness for certain borrowers.
Federal loan servicers are expected to begin sending notices to roughly 7 million borrowers currently in SAVE-related forbearance, giving them 90 days to select a new repayment plan.
Borrowers who do not choose a plan could be automatically placed into Standard or Tiered Standard repayment plans.
Lawmakers say the elimination of SAVE could substantially increase monthly payments for many borrowers.
The lawmakers urged the department to automatically place SAVE borrowers into the lowest-cost repayment plan available if they do not actively select a new option.
They argued that doing so could reduce the risk of widespread delinquencies and defaults during the transition period.
Concerns grow over credit-score damage
The letter highlights broader economic consequences stemming from rising student-loan delinquencies.
According to data cited by lawmakers, approximately 2 million borrowers experienced credit-score declines averaging about 100 points during 2025.
The lawmakers warned that significant credit-score declines can make it harder for borrowers to qualify for mortgages, vehicle loans, rental housing, and other forms of credit.
They also cited research suggesting that rising student-loan delinquency rates are associated with lower homeownership levels.
Lawmakers seek extension of collection pause
Another major focus of the letter is the administration’s handling of collections on defaulted student loans.
The Department of Education paused involuntary collections earlier this year while preparing for repayment system changes. The lawmakers are urging the department to continue that pause and refrain from resuming wage garnishments, Social Security offsets, and tax refund seizures.
They argue that restarting collections before broader borrower protections are implemented could worsen financial instability for millions of households.
The lawmakers also requested the creation of an interest-free default-prevention forbearance option for struggling borrowers.
The Department of Education is preparing to transfer responsibility for defaulted student-loan collections to the Treasury Department.
The lawmakers strongly objected to the move and called on the administration to terminate the arrangement.
They argued that shifting collections responsibilities while default rates are rising could increase hardship for borrowers and reduce opportunities for intervention before accounts enter more aggressive collection processes.
The letter asks the department to halt the transfer until additional borrower protections are in place.
The lawmakers also criticized staffing reductions within the Office of Federal Student Aid.
According to the letter, the department eliminated 653 Federal Student Aid positions, representing more than 40% of the office responsible for managing federal student loans and overseeing loan servicers.
The coalition argued that reduced staffing could hinder borrower assistance efforts and weaken oversight of loan-servicing companies during a major repayment transition.
They urged the department to rehire staff responsible for borrower support and servicer oversight.
Education Department defends repayment changes
Despite criticism from congressional Democrats, the Department of Education has maintained that the upcoming reforms are intended to improve the federal student-loan system.
Undersecretary Nicholas Kent said in a statement that the changes “will ensure students continue to have the access that they need for federal student loans, while helping prevent borrowers from taking on unmanageable debt levels that they may never be able to repay.”
The administration has not yet publicly responded to the lawmakers’ latest requests, but the June 22 deadline outlined in the letter is likely to keep attention focused on student-loan policy as the July 1 repayment overhaul approaches.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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