The Education Department sent a “Dear Colleague” letter to universities on Monday warning them of their obligations to support student loan borrowers as the Trump administration ramps up collections for those in default.
While the department says borrowers have the “primary responsibility” to ensure they repay their loans, schools should make sure they support their former students through the process.
The letter threatens that schools with a high default rate among their alumni could lose access to federal student aid.
“As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students,” Education Secretary Linda McMahon said.
“For too long, insufficient transparency and accountability structures have allowed U.S. universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market,” she added.
In the letter, McMahon told schools to reach out to former students and let them know any loans not in deferment or forebearance must begin repayment by June 30.
The letter came the same day the department restarted involuntary collections for borrowers who have defaulted, meaning individuals who have not paid on their student loans in more than 270 days could see federal payments halted or even their wages garnished.
Involuntary collections have been paused for more than five years since the COVID-19 pandemic.
It also comes at the same time congressional Republicans are looking to consolidate repayment plans down to two options, worrying some advocates who believe it could increase monthly payments.
