Trump administration officials prepare punitive measures for student loan borrowers in default

According to five people familiar with the matter, Trump administration officials are preparing to impose financial penalties next year on millions of Americans who are delinquent on federal student loans. Three of the sources said the Treasury Department is advancing plans to hire private debt collection agencies as early as November. The sources said the relevant plan is unlikely to be made public before the midterm elections. This previously unreported preparatory work indicates that the government is preparing to implement a policy that had been shelved, out of concern that it would hit nearly 10 million defaulting borrowers. Within the government, federal agencies have been divided over how to manage the $1.7 trillion student loan portfolio. Sources said that last year the White House Office of Management and Budget helped the Department of Education prepare to garnish the federal benefits and wages of defaulting borrowers; but Treasury officials halted the work, citing the economic costs of taking punitive measures against workers. The White House Office of Management and Budget and the Treasury Department declined to comment. The Department of Education said in a statement: "We will not respond to this type of exploratory inquiry."