The Trump administration has released new student loan repayment rules that make it harder for Americans to free themselves of their federal student loans.
The changes mean bigger monthly payments, lifetime caps on borrowing and harsh collection measures as student loan delinquencies and defaults soar to record levels. Consider this: one borrower defaults every nine seconds – we’re talking about hardworking teachers, nurses, union members and veterans — young and old, urban and rural, Black and White.
It also means more aspiring students must depend on private student debt lenders, who are the big winners in the policy changes. Yet, 40 percent of Americans do not qualify for private student loans, according to research by the Century Foundation and Protect Borrowers.
Make no mistake, the federal government is putting the squeeze on students and working people with student debt who are already struggling to make ends meet. As a consequence of these policies, more Black and Brown people are going to have limited opportunities to pursue higher education because it will be financially out of reach. Add to that the alarming number of student loan borrowers who themselves are victims of unscrupulous lenders and may face crushing debt the remainder of their lives.
Recently released Department of Education data shows that by the end of last year, roughly a quarter of the 43 million recipients of federal student loans were significantly behind in their payments. About 7.7 million borrowers nationwide had defaulted on $181 billion in student loans, the data said. In New York, about 11 percent of New York’s 2.4 million borrowers were in default by late 2025, rising to over 19 percent when including those in severe delinquency, the data shows. Those with loans over 270 days past due face involuntary collections, including wage garnishment without a court order, adverse credit reporting, seizer of their tax refunds and, for seniors, deductions from their social security payments.
Governor Hochul and the New York State Legislature deserve credit for helping student borrowers by funding the Education Debt Consumer Assistance Program (EDCAP), the first-in-the-nation state certified student loan assistance program. Run by my organization, the Community Service Society, it offers free assistance to borrowers trying to navigate their loan repayment and forgiveness options.
If you’re behind in your loan payments, take action now to contain the damage. Contact EDCAP at 888-614-5004 or schedule an appointment online. Borrowers in default may be able to rehabilitate or consolidate their loans to get out of default, but it’s important to get expert help to choose the best option.
EDCAP’s clients are overwhelmingly women, half have household incomes above $60,000 and 43 percent are non-Hispanic White. Among New York City’s indebted, 13.6 percent owe less than $5,000, while 22.7 percent owe an average of $28,287, according to the New York Federal Reserve Bank’s most recent household credit update. That may not seem like a ton of money, but it represents a huge burden on top of rent, child care, food, commuting costs, health care and other daily necessities. It also represents a significant barrier to saving, starting families, buying homes, and further education.
Trump officials argue their revamp of student loans “lower college costs” and makes repayment easier. They argue limiting loans will force colleges to lower tuition. Nothing could be further from reality.
Millions of student-loan borrowers face significantly higher monthly payments beginning July 1 as the Trump administration winds down the most generous income-based repayment plan, Saving on a Valuable Education Plan (SAVE). It is being replaced by two options: a revised version of the existing standard plan or a new program that charges a flat percentage of gross annual income called the Repayment Assistance Plan (or RAP). There are also new limitations on Public Service Loan Forgiveness (PSLF).
Beginning this summer, aspiring students face new lifetime federal loan caps: $20,500 annually ($100,000 total) for graduate students, $50,000 annually ($200,000 total) for professional degrees, and $20,000 annually for Parent PLUS loans. That is not enough to make ends meet, especially for low-income and out-of-state students. The average total cost of attendance (tuition, fees, room, and board) for a four-year degree ranges from more than $108,000 for public to over $230,000 for private.
Perhaps the most troubling change is the Trump administration’s move of the nation’s federal student loan portfolio from the Education Department to the Treasury Department, which has powerful tools to collect from millions of borrowers who are in default. Unlike other debt, bankruptcy protections are limited and there is no statute of limitation on the collection of student loans.
The current policy shift is an about-face from the Biden administration, which introduced policies to reduce monthly bills and canceled $138 billion in student debt for 5.3 million borrowers.
Today, the situation facing student borrowers is poised to get worse. Fortunately, the state’s support of EDCAP means New Yorkers have a resource to help mitigate the effects of harmful federal policies out of touch with the struggles of those trying to make a better life for themselves and their families.
David R. Jones, Esq., is President and CEO of the Community Service Society of New York (CSS), the leading voice on behalf of low-income New Yorkers for more than 175 years. The views expressed in this column are solely those of the writer. The Urban Agenda is available on CSS’s website: www.cssny.org