Linda McMahon Puts Student Loan Borrowers in a Chokehold

When corporate lobbyists are celebrating, you can be sure we’re getting a raw deal

In just a matter of days, 1.8 million student loan borrowers in default will be thrust back into the crushing gears of an unrelenting student loan collection apparatus, thanks to former WWE executive and now Secretary of Education Linda McMahon.

She announced her plans in a Wall Street Journal op-ed on April 21.

“On May 5, we will begin the process of moving roughly 1.8 million borrowers into repayment plans and restart collections of loans in default. Borrowers who don’t make payments on time will see their credit scores go down, and in some cases their wages automatically garnished,” McMahon wrote.

After years of Republicans using the courts to thwart any attempt by the Biden administration to alleviate the economic burden caused by student loans, Republicans are now taking yet another step to further encumber Americans with student loan debt.

To put it mildly, this is barbaric. Unlike with other economic hardships, these borrowers won’t have a choice to make regarding how to spend their paychecks when trying to make ends meet—the money just won’t be there at all.

“For 5 million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford,” said Executive Director of the Student Borrower Protection Center Mike Pierce in a statement.

Struggling student loan borrowers have been dealt setback after setback as the Trump administration and MAGA Republicans have sought to limit or even eliminate other forms of debt relief as well. In February, the Trump administration removed applications for certain income-driven repayment plans and loan consolidation applications from the Department of Education’s website. In March, Trump issued an executive order drastically scaling back who can qualify for the Public Service Loan Forgiveness program.

After Trump gutted the Consumer Financial Protection Bureau at the beginning of his term, the CFPB, now a toothless husk of its former self, has signaled to the industry that it will be “deprioritizing” any regulatory and enforcement work around student loans, according to a memo obtained by POLITICO.

To that end, the CFPB dropped its case against the National Collegiate Student Loan Trusts. As a consequence, a proposed $2.25 million settlement that would have gone to borrowers who were harmed by private lenders through improper debt collection tactics is now scuttled.

Just this week, Republicans on the House Education and Workforce Committee released their proposal for “higher education reform,” which, if passed, would totally eliminate many student loan repayment programs and offer borrowers only two options.

“Borrowers would have the option for a fixed monthly amount paid over a certain period of time based on debt load or an income-based plan dubbed the ‘Repayment Assistance Plan,’” POLITICO reports.

A day later, POLITICO Morning Money—the outlet’s financial services newsletter—heralded the plan as a potential win for loan financiers, with lobbyists taking a victory lap. For example:

“It’s a victory, and it certainly opens up market opportunity,” said Robert Moran, a principal at Bose Public Affairs Group whose clients include banks and other private student lenders. “But it’s a market opportunity with a potentially higher risk.”

When corporate lobbyists are celebrating, you can be sure we’re getting a raw deal.

As we’ve seen in just the first 100 days of Trump’s term, his administration is happy to deliberately throw the economy into turmoil, raising prices and the cost of living for working people, all to further enrich his billionaire buddies. Now, it appears, the tag team of Trump and McMahon want to piledrive borrowers and bury them under an even larger mountain of debt for the foreseeable future.

- MoveOn