Hammer drops on student loan defaulters: No delays, no mercy

Millions of Americans will have to start paying back their college loans, reports Stacy Cowley in the New York Times. "After a five-year pause on penalizing borrowers for not making student loan payments, the federal government dropped the hammer," she writes.

Those who don't pay will see their credit ratings fall. Starting on May 5, the government can begin garnishing defaulters' "tax refunds, Social Security benefits and -- eventually -- wages," notes NPR.

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Education Secretary Linda McMahon declared in a press release. "The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers."

"Only one-third of the 38 million Americans who have borrowed money to pay for college or graduate school and should be making payments actually are, according to government data," writes Cowley.

Frequent changes in repayment policies have confused borrowers, she writes. President Biden's attempt to forgive many loans was frozen by legal challenges, and "now seems certain to be struck down by federal courts or eliminated by the Trump administration."

“You’ve gotten people out of the habit of repaying now for the better part of five years,” said Colleen Campbell, who resigned last month as the executive director of the Education Department’s loan portfolio management office. “For some borrowers, several cohorts of them, you’ve never built the repayment habit at all.”

The Trump administration wants to move the student loan portfolio to the Small Business Administration, but it's still the responsibility of the Education Department, which has laid off employees. Borrowers complain online about "hours-long waits" to reach someone who'll explain what they're supposed to repay, and little information on income-based repayment and other options, writes Cowley.

On The 74, Kerry McDonald writes about the growing popularity of alternatives to a four-year college degree, such as apprenticeship, microcredentials and entrepreneurship.

In her new book, Who Needs College Anymore? Imagining A Future Where Degrees Won’t Matter, Kathleen deLaski, founder of the education Design Lab, says young people are wary of college debt and looking for "practical, 'just-in-time-learning' options connected more closely with career possibilities." 

Only 38 percent of American adults have a bachelor's degree, DeLaski tells Michael B. Horn. However, other paths to the American Dream "can't scale because they don't qualify for the prestige and funding that colleges enjoy."

Some colleges are embracing alternative learning paths, such as short-term certificates and dual enrollment for high schoolers, she says. Ultimately, she foresees a merger of non-elite higher education and workforce training.