✎ Contributed by Ty Griffin
The Department of Education has resumed collection activity on defaulted federal student loans, ending a five-year pause that began during the pandemic. The government began notifying nearly 200,000 borrowers this week that their federal benefits—including Social Security—may be garnished in as little as 30 days. Later this summer, millions more will receive notices about potential wage seizures as part of a broader enforcement push.
This policy shift, driven by the Trump administration’s harder stance on debt collection, marks a sharp departure from the previous administration’s focus on forbearance and forgiveness. Experts warn the compressed notice period and accelerated timeline could intensify financial strain on vulnerable borrowers.
Performance of Public Student Loan and Fintech Lenders
- Navient Corp. (NASDAQ: NAVI): Trading at $12.71, down $0.06 (0.47%) today.
- SLM Corp. (NASDAQ: SLM): Trading at $31.19, down $0.28 (0.89%) today.
- Nelnet Inc. (NYSE: NNI): Trading at $106.34, down $0.46 (0.43%) today.
- SoFi Technologies Inc. (NASDAQ: SOFI): Trading at $12.71, down $0.15 (1.17%) today.
Industry Impact
Loan servicers like Navient and Nelnet may see near-term benefits from increased collection volume, but the aggressive rollout has sparked criticism. Older borrowers—especially the nearly 3 million over age 62 with federal student loan debt—could face garnishment of essential benefits, raising concerns about food insecurity and reduced access to medical care.
While SLM Corp. and SoFi are more focused on private lending and broader financial services, both are sensitive to consumer credit health and could face indirect impacts. Analysts warn that heightened collection activity may erode borrower goodwill and dampen demand for refinancing or new originations.
Borrowers in default are being urged to explore rehabilitation options or income-driven repayment plans. For millions now at risk of renewed collections, federal relief has officially shifted to recovery.
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