The Department of Education of the United States has made a significant decision on student loan debt.


Student loan debt continues to be a hot topic of conversation among those affected by the current COVID-19 outbreak. Following the virus’s impact on the economy, which resulted in layoffs and wage reductions, Americans are only now beginning to look for new opportunities.

Inflation is now contributing to the deterioration of the nation’s financial predicament even further. Within the context of this crisis, the United States Department of Education has reached a significant decision addressing student loans that have been defaulted on.


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A program known as the Treasury Offset Program was in place before the COVID-19 pandemic, and it permitted the United States government to confiscate federal monies from individuals who were in arrears on their student loans.

Tax refunds and Social Security payments were among the large government payments received. They also included the child tax credits that were distributed throughout the second half of the year 2021.

The Department of Education, on the other hand, has now decided to suspend that initiative. The federal seizure of government funds has been halted until the end of November 2021.

9 million borrowers are burdened by student debt.

The CNBC news network reports that approximately 9 million Americans have defaulted on their federal student loan obligations. In accordance with the publication, this indicates that those individuals have fallen at least 270 days behind on their debt payments.

As a result, prior to the onset of the pandemic, the Treasury Offset Program enabled the Department of Education to collect on that debt through federally issued payments through the Treasury Offset Program.

Several months before the outbreak of the pandemic, the Treasury Offset Program seized roughly $4.9 billion to satisfy debts owed to the Department of Education, according to the Treasury Department. Debt repayments, on the other hand, have come to a grinding halt, as borrowers are not obligated to begin paying payments until May of 2018.

Fortunately, borrowers who have past-due debt have an additional six months to begin making payments, putting us right on the deadline of November 1st.

According to Abigail Seldin, who is in charge of a philanthropic foundation that focuses on improving access to public services, the objective of the government-sponsored assistance programs is to help people in need.

“The objective of these social safety net programs is to safeguard and prevent people in the United States from experiencing crushing poverty–not to serve as a reconciliation system for the federal government to deploy in connection with the student loan portfolio,” the authors write.

Default Has an Impact on Specific Populations of American Citizens

The confiscation of monies supplied by the government contributes to the federal department’s financial difficulties. Nonetheless, it has a substantial impact on some social groups, adding an additional weight to the already burdened individuals.

According to the news organization, individuals of color, particularly African Americans, are disproportionately affected by default. Students with children, Pell Grant recipients, and veterans of the United States military continue to have high rates of student debt default, according to the Federal Reserve.

When it comes to the monies themselves, according to CNBC, the United States government retains the ability to take 100 percent of federal tax returns for a variety of reasons. These include debts incurred as a result of child support, unemployment insurance, and state income taxes, among other things.

Additionally, it has the authority to withhold a significant portion of federal pay, up to 65 percent. Lastly, the department may be able to recover up to 15 percent of the total Social Security benefits received.

When the Treasury Offset Program was implemented, the Department of Education made the decision that it would be in direct opposition to the Biden administration’s American Rescue Plan, which was designed to combat pervasive poverty throughout the United States.


Master of Science student at the California Institute of Technology, Devanny. Since he began working as a freelance writer more than 4 years ago, he has contributed to various publications, including blogs, magazines, poetry websites, newspapers, and internet debates. Pankaj has been contributing original content to The Current in a freelance capacity throughout the past year. Words from Pankaj: "Spread love everywhere you go. Let no one ever come to you without leaving happier."