Trump officials warn colleges about low student loan repayment rates
U.S. Secretary of Education Linda McMahon speaks at a press conference at the White House on November 20, 2025 in Washington, DC, USA.
Evelyn Hockstein | Reuters
The Trump administration is increasing pressure on universities to ensure that their graduates and other former students repay federal student loans.
US Department of Education published guide Higher education institutions were reminded on Wednesday to implement practices that will keep default and delinquency rates of their students low. Doing so should be a priority not only for the university’s financial aid office, but also for its institutional leadership, the department said.
The announcement also included a caveat: Colleges with high student loan default rates may lose eligibility for federal student aid programs, the administration said.
The student loan delinquency rate at more than 1,800 higher education institutions is 25% or higher, the Department of Education said in a press release. The delinquency rate is based on students who entered repayment of their Direct loans between January 2020 and May 2025 and were more than 90 days delinquent.
“Institutions cannot take advantage of taxpayer dollars while ignoring the fact that a significant portion of their students are not prepared to repay their loans,” Education Undersecretary Nicholas Kent said in a statement. he said.
More than 42 million Americans have education debt, with total outstanding debt surpassing 2017 $1.6 trillionAccording to the Congressional Research Service.
‘A half-baked effort to scapegoat schools’
The notice to universities comes as Trump officials grapple with an increase in student loan borrowers defaulting on their payments. Last year, the administration warned that 10 million borrowers, representing about a quarter of all federal student loan holders, were close to default.
The Ministry of Education announced last year that it would start collection activities against defaulted debtors, but this has repeatedly stalled enforcement efforts.
Consumer advocates say the administration’s policies and recent staff cuts have made borrowers’ situations worse.
More than 600,000 federal student loan holders are stuck in a backlog of applications for an affordable repayment plan, the Education Department revealed in a recent court filing. More than 86,000 borrowers are awaiting the department’s decision on student loan forgiveness.
Trump administration in March terminated Thousands of Department of Education employees, including many who assist borrowers.
Mike Pierce, co-founder and chief executive of Protect Borrowers, said the proposal is “a half-baked effort to scapegoat schools” amid the administration’s efforts to undermine programs that help borrowers. He noted the elimination of several affordable repayment plans in President Donald Trump’s One Big Beautiful Bill.
The average U.S. household has a family of four and an income of $81,000, monthly bill That figure rose from $36 to $440 due to regulatory changes, according to the Institute for College Access and Success, a nonprofit organization that promotes college affordability.
