UW–Madison’s Nick Hillman was featured in a recent Wisconsin Public Radio story examining the federal government’s decision to resume collections on defaulted student loans, including wage garnishment.
Hillman, a professor in the School of Education’s Department of Educational Leadership and Policy Analysis, discussed the U.S. Department of Education’s plans to begin collecting unpaid federal student loan debt through wage garnishment, tax refund interception, and Social Security offsets — and what that means for borrowers in Wisconsin.
About 74,000 Wisconsin borrowers — roughly 10 percent of federal student loan borrowers in the state — are currently in default, according to U.S. Department of Education data. But Hillman notes that number only includes people who have defaulted since the federal government began collecting payments again last year after a pandemic pause.
He adds that the federal government has always had the ability to collect unpaid student loan debts by withholding money. “It’s been a mechanism of the federal government for decades,” he explains. “The big question for me is, what’s an appropriate role and how should the government use that authority.”
Hillman also emphasizes that restarting collections after a long period of disruption will be difficult for many borrowers, and could cause confusion. “The repayment system is fundamentally broken,” he says. “It’s easy to shut a broken system off. It’s very difficult to turn a broken system back on, and when you do, it just exposes all of the breaks in the system.”
Read or listen to the full Wisconsin Public Radio story.