U.S. Education Secretary Linda McMahon speaks during a press briefing at the White House in Washington, D.C., U.S., November 20, 2025.
Evelyn Hockstein | Reuters
The Trump administration is ramping up pressure on colleges to ensure their graduates and other former students repay their federal student loans.
The U.S. Department of Education issued guidance on Wednesday for higher education institutions, reminding them to institute practices to keep their students’ delinquency and default rates low. The department said that doing so should be a priority not just for a college’s financial aid office but also for its institutional leadership.
There was also a warning in the announcement: Colleges with high student loan default rates could lose eligibility for federal student aid programs, the administration said.
More than 1,800 higher education institutions have student loan nonpayment rates of 25% or higher, the Education Department said in its press release. The nonpayment rate was based on students who entered repayment on their Direct loans between January 2020 and May 2025 and were greater than 90 days delinquent.
“Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans,” Under Secretary of Education Nicholas Kent said in a statement.
More than 42 million Americans carry education debt, with the total outstanding debt exceeding $1.6 trillion, according to the Congressional Research Service.
‘A half-baked effort to scapegoat schools’
The notice to colleges comes as Trump officials grapple with a surge in student loan borrowers falling behind on their payments. Last year, the administration warned that 10 million borrowers were approaching default, which represents about a quarter of all federal student loan holders.
The Education Department announced last year that it would begin collection activity against defaulted borrowers, but has repeatedly paused those enforcement efforts.
Consumer advocates say that the administration’s policies and recent staff cuts have worsened the situation for borrowers.
More than 600,000 federal student loan holders remain stuck in a backlog of applications for an affordable repayment plan, the Education Department disclosed in a recent court filing. More than 86,000 borrowers are waiting for a decision from the department on their student loan forgiveness.
In March, the Trump administration terminated thousands of the Education Department’s staffers, including many of the people who helped assist borrowers.
Mike Pierce, the executive director and co-founder of Protect Borrowers, said the proposal is “a half-baked effort to scapegoat schools,” amid administration efforts that have undercut programs that help borrowers. He pointed to the elimination of several affordable repayment plans in President Donald Trump’s One Big Beautiful Bill Act.
The median U.S. household, with a family of four and an income of $81,000, could see its monthly bill surge to $440 from $36, due to the legislative changes, according to the Institute for College Access & Success, a nonprofit organization that promotes college affordability.