With student loan payments becoming a flashpoint in the national debate over economic policy, we turn to Donald Gainsborough, a leading voice in policy and legislation from Government Curated. As the Trump administration navigates the complex task of resuming collections while millions of Americans grapple with the rising cost of living, Gainsborough offers a critical analysis of the current strategies, the communication failures that have plagued the system, and the path forward for nearly 12 million borrowers who have fallen behind. This interview delves into the balancing act between fiscal responsibility and economic reality, exploring the practical impact of new repayment plans, the urgent need to rebuild borrower trust after years of policy whiplash, and the operational hurdles that lie ahead for the Department of Education.
With nearly 12 million people behind on student loans and struggling with living costs, how can the push to resume payments be balanced with economic reality? What specific, practical steps can be taken to help borrowers manage these new bills without sacrificing necessities like food or housing?
It’s a collision course, plain and simple. You have this administrative push to collect, but it’s running headlong into the fact that people are under immense financial stress from lingering inflation and the high cost of living. The reality is that for many families, student loan debt falls by the wayside when they’re trying to put food on the table or pay for healthcare. The practical steps being offered are the new repayment options established under the One Big Beautiful Bill Act. The idea is to provide two clear paths: a standard plan based on debt size and, more critically, an income-based Repayment Assistance Plan. This is intended to be the safety valve, tying payments to a borrower’s actual ability to pay, so they aren’t forced to choose between their loan and their groceries.
The new income-based plan offers payments as low as $10 for the poorest borrowers. How does this specifically address their ability to pay compared to previous plans, and what metrics will be used to track whether it successfully prevents defaults among this vulnerable group?
This new income-driven plan is laser-focused on what Republicans see as the most at-risk group: poorer Americans. By setting payments as low as $10 for anyone earning $10,000 a year or less, it directly targets affordability for those with the least discretionary income. The philosophy, as articulated by leaders like House education committee Chair Tim Walberg, is that repayment should be based on need and ability. It’s a less generous plan overall than what the Biden administration offered, which had $0 payment options and faster forgiveness, but the core design is to provide a manageable floor. As for tracking success, the primary metric will undoubtedly be the default rate among this low-income cohort. If we see a significant reduction in new defaults and a steady stream of these small, consistent payments from this group, the administration will view it as a success. It’s all about preventing them from falling off the cliff entirely.
Borrowers have experienced significant “whiplash” from rapid policy changes. Beyond basic announcements, what is the detailed communication plan to ensure every borrower understands their new options and obligations, and what steps will you take to rebuild their trust in the system?
The whiplash is real and it’s a huge part of the problem. As Rep. Kevin Kiley noted, it’s a challenge for people working long hours just to support their families to also have to track every regulatory change. The chaos has led many to do nothing, which only worsens their situation. Rebuilding trust starts with clarity and consistency. The most fundamental step is a single, unified message that the payment pause is definitively over and that new, stable options are available. This can’t just be an email blast. It requires a multi-channel campaign through the Education Department and, critically, through the loan servicers who are the direct point of contact. The message must be simple: payments are due, but there are new plans designed to help you, and here is exactly how you enroll. Anything less than that will just add to the confusion that allowed this problem to fester.
Considering the troubled rollout of the new federal student aid form, what specific safeguards are in place to prevent a similar scenario with the new repayment plans launching in July? Please walk me through the contingency plans for handling technical glitches or overwhelmed call centers.
This is the million-dollar question, and frankly, it’s a major concern. We saw how the botched rollout of the new FAFSA was marred by technical difficulties, and there’s a real fear of a repeat performance. The stakes are incredibly high. The primary safeguard is supposed to be the simplification of the options themselves—offering just a few clear paths instead of a confusing array of programs. However, for contingency, the plan must involve robust stress-testing of the online portals before the July launch. There needs to be a surge capacity plan for the call centers at the loan servicing organizations, anticipating a massive influx of calls. This means having properly trained staff ready to walk borrowers through the new plans. If the system glitches, there must be a clear, pre-approved communication protocol to inform borrowers immediately about the issue and provide alternative methods for enrollment, whether it’s by phone or mail, to prevent mass frustration and non-enrollment.
The recent pause on wage and tax refund seizures was a notable reversal. What specific economic indicators or borrower distress signals will the Education Department monitor to determine when it might be appropriate to restart these involuntary collections, and how will that decision be made?
That reversal was absolutely significant and seemed to be triggered by a direct public question about the optics of taking money from struggling families. The decision to restart those involuntary collections will likely be tied to a combination of macroeconomic indicators and borrower-specific data. The department will be watching the national unemployment rate and inflation figures to gauge the overall economic pressure on households. More specifically, they’ll monitor the delinquency and default rates within their own portfolio. If they see a sustained period where the number of borrowers successfully entering and staying in the new repayment plans increases, and the flow of new defaults slows to a trickle, that will signal that the system is stabilizing. The decision, as Undersecretary Nicholas Kent’s statement suggested, will be made when the department feels the new, more affordable options are fully implemented and borrowers have had a fair chance to get back on track.
You’ve mentioned that mixed messages are to blame for non-payment. What is the single, most important message borrowers need to hear right now, and what actions are being taken to ensure that message is delivered clearly and consistently across all government platforms and loan servicers?
The single most important message is: “The pause is over, but help is available.” It’s a two-part message that has to be delivered in the same breath. You can’t just tell people payments are due without immediately following up with the solution. For too long, the conversation was muddled with talk of widespread cancellation, which created confusion and a “wait-and-see” attitude that led many people to stop paying altogether, as Secretary McMahon pointed out. The action being taken now is to pivot the entire communication strategy toward the two new repayment plans. The department is trying to simplify the landscape, stating that loans must be repaid, but that these new tools are the way to do it. Ensuring consistency means that every email, every website update, and every script used by a loan servicer must echo this exact message without deviation. It’s about ending the chaos with a clear, singular directive.
What is your forecast for student loan delinquency rates over the next 18 months?
Given the tremendous economic pressure on borrowers and the administrative hurdles of launching new, complex repayment systems, my forecast is unfortunately a challenging one. I anticipate an initial, sharp spike in delinquency rates in the first six months after payments fully resume. Many of the nearly 12 million borrowers already behind will struggle to navigate the new system, and the “whiplash” from policy changes will result in a period of significant confusion and non-compliance. However, if the Department of Education can effectively communicate and implement the new income-driven plans, particularly the low-payment options for the poorest Americans, we should start to see those delinquency rates stabilize and then begin a slow, gradual decline over the following year. The ultimate success or failure will hinge entirely on execution and communication, not just policy.
