U.S. Secretary of Education Linda McMahon speaks during a press conference at the White House on November 20, 2025 in Washington, DC, USA.
Evelyn HochsteinReuter
The Trump administration is increasing pressure on universities to force alumni and former students to repay federal student loans.
The U.S. Department of Education issued guidance Wednesday for higher education institutions, calling on them to put practices in place to keep student delinquency and default rates low. The department said doing so should be a priority not only for university financial aid offices, but also for university institutional leadership.
The announcement also included a warning: Colleges with high student loan default rates could lose eligibility for federal student aid programs, the government said.
The Department of Education said in a press release that more than 1,800 higher education institutions have student loan default rates of 25% or higher. Delinquency rates are based on students who began repaying their Direct Loans between January 2020 and May 2025 and were 90 days or more delinquent.
“Educational institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant proportion of students are not ready to repay their loans,” Education Undersecretary Nicholas Kent said in a statement.
According to the Congressional Research Service, more than 42 million Americans have education debt, totaling more than $1.6 trillion.
“A half-hearted effort to use the school as a scapegoat”
The notice to colleges comes as the Trump administration grapples with a surge in student loan borrowers that is delaying payments. Last year, the government warned that 10 million borrowers, or about a quarter of federal student loan holders, were nearing default.
The Education Ministry announced last year that it would begin collection efforts against defaulters, but enforcement efforts have been repeatedly halted.
Consumer advocacy groups say the administration’s policies and recent layoffs are worsening conditions for borrowers.
More than 600,000 federal student loan holders are still stuck applying for affordable repayment plans, the Department of Education said in a recent court filing. More than 86,000 borrowers are awaiting the department’s decision on student loan forgiveness.
In March, the Trump administration laid off thousands of Education Department employees, including many who worked in debtor assistance.
Mike Pearce, co-founder and executive director of Protect Borrowers, said the proposal is a “half-hearted effort to scapegoat schools” in the administration’s efforts to cut programs that help borrowers. He pointed to President Donald Trump’s One Big Beautiful Bill Act, which eliminated several affordable repayment plans.
According to the Institute for College Access & Success, a nonprofit organization that promotes college affordability, the median U.S. household of four has an income of $81,000, but the change in the law could cause monthly bills to jump from $36 to $440.
