Default Rate Five Times Higher Than Whites Adds to Black Grads’ Economic Distress
By Charlene Crowell
On behalf of the nearly 9 million people who are now in default on their student loans, a coalition of advocates from consumer, civil rights, and education organizations are appealing to the federal Education Department to halt its plans to begin garnishing borrower wages this month. Default status connotes borrowers are 270 days or more behind on their payments.
Citing new research from Protect Borrowers, formerly the Student Borrower Protection Center, the coalition advised Education Secretary Linda McMahon in a January 7 letter that a new student loan default occurred every nine seconds in 2025. That escalating rate is unprecedented, and is nearly three times worse than in 2019, the year prior to the COVID-19 pandemic.
Further, according to the advocates, the Trump administration’s student loan policies are disproportionately harming Black and older borrowers. Signing the joint letter of appeal were: Protect Borrowers, American Federation of Teachers, the Debt Collective, NAACP, National Education Association, the Student Debt Crisis Center, and Young Invincibles.
“Research shows that involuntary collections only exacerbate the economic challenges faced by defaulted borrowers, who are disproportionately seniors and Black borrowers,” wrote the coalition. “In fact, of the borrowers already in default, roughly a third of them are older borrowers. Black graduates are additionally five times more likely to default than their white peers.”
Additionally, and according to Protect Borrowers, nearly two-thirds of the borrowers who defaulted during the Trump Administration—more than 2.6 million people—live in states that President Trump won in the 2024 election. Among the states most severely affected were Florida, Georgia, Ohio, and Texas, each of which saw 100,000 or more borrowers default last year.
“The decision to resume wage garnishment against millions of borrowers amidst a growing affordability crisis crushing working families is calloused and unnecessary,” continued the coalition. “The decision also comes at a time when struggling borrowers have been forced to wait amidst a nearly 1 million application backlog to enroll in an Income-Driven Repayment (IDR) plan, and as mass layoffs at the Department have made it even harder for borrowers to get help with their student loans or if they are experiencing issues with their student loan servicer.”
For Derrick Johnson, President and CEO of the NAACP, the nation’s oldest civil rights organization, the Trump administration policies are about financial rights.
“By garnishing wages for defaulted student loan borrowers, the Trump Administration will only deepen financial hardship for working families and disproportionately harm Black borrowers,” said Johnson. “Millions are already struggling with rising costs and economic uncertainty, and stripping wages will only push families further into financial crisis.”
Randi Weingarten, President of the American Federation of Teachers, agreed with Johnson: “This is not about borrowers’ responsibility; it’s outright hostility to the young people trying to get ahead. The Trump Administration is choosing to squeeze teachers, nurses and others while prices are increasing and families are struggling to stay afloat, ripping away wages and tax refunds when people need them most.”
A fact sheet developed by the Center for Responsible Lending tracks key 2025 policy decisions that summarize the Education Department’s actions taken against student loan borrowers. These include:
- In March 2025, the Department cut nearly half its workforce, with the Federal Student Aid office and Office for Civil Rights among the hardest hit. With Federal Student Aid’s servicing and community outreach infrastructures dismantled, systemic servicing errors are less likely to be caught or corrected, leaving borrowers with fewer avenues for help just as major loan policy changes are being rolled out.
- In May 2025, the Department reinstated the Treasury Offset Program, allowing the government to seize tax refunds from borrowers in default.
- On August 1, 2025, the Department of Education restarted interest accrual for borrowers with Department of Education loans in the SAVE forbearance. Since 2023, SAVE’s unpaid interest shielded borrowers from balance growth. With that protection gone, borrowers’ balances will now grow during this forbearance and may keep rising if monthly payments do not fully cover accrued interest. This shift makes repayment harder and adds long-term uncertainty for more than 7 million borrowers.
Beginning July 1, 2026, parents who take out new Parent PLUS loans will no longer be eligible for any income-driven repayment plan. That means no access to income-contingent repayment (ICR) or repayment assistance plan (RAP) leaving the standard repayment plan as their only choice. Borrowers with existing Parent PLUS loans can preserve access to ICR if they consolidate their loans before the July 1, 2026, deadline.
“As safeguards are rolled back and oversight weakens, borrowers face growing balances and greater financial strain, making it urgent to press for stronger policies that preserve the promise of higher education as a pathway to opportunity,” concluded CRL.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.