The administration of US President Donald Trump is preparing to intensify debt collection against millions of Americans who have defaulted on their federal student loans, with financial penalties potentially taking effect in 2027.

According to a report by The Washington Sun published on October 19, 2026, the US Treasury Department is moving towards hiring private debt collection companies, potentially as early as November, to help recover outstanding student loan payments.

The plans could include withholding tax refunds and certain federal benefits, as well as garnishing wages to recover unpaid debts. However, the measures have not been formally announced, and their implementation timeline remains uncertain.

Officials are reportedly considering delaying a public announcement until after the November midterm elections. The administration had previously paused more aggressive collection measures amid concerns about their effects on low-income borrowers.

The federal government’s student loan portfolio stands at approximately $1.7 trillion, with nearly 10 million borrowers reportedly in default. The Education Department and Treasury have been working together to improve loan management and recover outstanding payments.

The administration says stronger collection efforts are necessary to address the growing burden of unpaid loans and protect taxpayers. However, borrower advocates warn that taking money directly from wages, tax refunds or benefits could deepen financial hardship for households already struggling with living costs.

Michael Pierce, executive director of Protect Borrowers, criticised the prospect of renewed collection measures, warning that affected families could have less money available for essentials such as food and rent.

Student debt expert Preston Cooper has argued that enforcement should be accompanied by efforts to help borrowers avoid default and access affordable repayment arrangements.

The Treasury Department and the White House Office of Management and Budget declined to comment on the reported plans, while the Education Department said it would not respond to the inquiry.

For now, the proposals remain under consideration, and it is unclear when or how extensively the administration will implement them.