The Trump administration announced on Friday suspended indefinitely Regarding the collection of delinquent federal student loan debt, including through the Treasury Department’s offset program, at least temporarily extending a program start as a temporary pandemic measure under the first Trump administration more than five years ago. The policy has since been extended through bipartisan legislation and executive action during the Biden administration.
Student debt relief may come as a relief to many members of Generation Z, who wealthJacqueline Munis recently reportedWith an average of $94,000 in student loan debt, they are trapped in the “economics of disillusionment.” Other experts, notably Kyla Scanlon, have repeatedly stated that “financial nihilism,” as coined by entrepreneur Demetri Kofinas, describes how Gen Z’s extreme anxiety about their future—whether it’s artificial intelligence, the $38 trillion national debt, or any other long-standing financial emergency—is driving them to engage in destructive behavior.
Trump, for his part, has struggled to address voters’ concerns about “Affordability”, and they reportedly stayed in close contact and even texted back and forth. new york post called “brotherhood,” with the bard of affordability himself: New York City Mayor Zohran Mamdani.
think committee for a responsible federal budgetHowever, as a nonpartisan watchdog that emphasizes the sustainability of fiscal policy, there is no excuse for this development.
CRFB President Maya MacGuineas called the decision “absolutely ridiculous,” six years after the pandemic first halted student debt collection.
“This is an incoherent political giveaway that doubles down on debt cancellation in the Biden era,” she wrote. “We are not in a pandemic, a financial crisis, or a deep recession. There is no reason to take emergency action on student debt, and there is no good reason for the president to abandon efforts to truly begin collecting debt payments.”
CRFB estimates that Trump’s abandonment of the collection will cost about $5 billion in lost revenue annually.
New pause, old script
So far, Trump’s second-term team has been moving in the opposite direction, restarting the Treasury Department’s offset program in May 2025 and preparing to reinstate wage garnishment for defaulted borrowers. The new policy abruptly reverses that trajectory, reinstating and extending a freeze that critics said was supposed to be temporary and related to the coronavirus crisis rather than a permanent fixture in higher education finance.
McGuinhas argued that by blocking collections, the administration risks undermining the “historic cost-saving reforms” of the federal student loan program approved by Congress this year, which aims to put the system on a more sustainable footing through a “fair repayment system.” She warned taxpayers would end up paying more, while borrowers could end up with larger balances and the wider economy could feel upward pressure on interest rates and inflation.
Conflict of Congressional Roles
At the heart of the fight is who should shape the future of student loans: Congress or the president acting alone. Lawmakers have enacted major reforms this year aimed at cutting long-term costs and solidifying a more predictable repayment framework, and CRFB believes the Trump administration has so far implemented them “with fiscal costs in mind.”
“The student loan program should not be a tool to stimulate the economy or buy votes,” McGuinhas argued. “It is a way to help millions of students get into college.” The White House should work with Congress to reform the collection of defaulted loans, if that is indeed what the White House wants to do, “but the loans should be paid back and the government should start collecting,” she added.
Just days ago, Trump once again took a page from Mamdani’s democratic socialist playbook by proposing a 10% cap on credit card interest rates. his former communications director Anthony Scaramuccisuggesting this “far left” move could only have come from one place: his text-message bromance with Gotham’s princelings.