How Trump’s crackdown on student loan repayments could affect 320K Utah borrowers

Madison Owens works two jobs and her husband holds down three more just so the Ogden couple can keep up with their monthly bills, like a financial version of Whack-a-mole that’s impossible for them to win.

And the game is about to get harder. Right now, their expenses don’t include what they’ll need to start covering next year, when Owens is done with her master‘s program in occupational health and her federal loan repayments from undergrad — which are deferred for now — kick in.

President Donald Trump’s administration has also promised to collect on loans like hers, particularly for those who have defaulted or missed a payment. She’s afraid she could land on that list if she doesn’t get a high-paying job in workplace safety when she graduates from the University of Utah.

“It is worrisome, especially as prices keep rising,” Owens said. “It’s just impossible to afford anything right now. Then you add student debt on top of that. It’s very hard to balance.”

Owens is one of more than 320,000 Utahns — 10% of the state’s population — who are currently saddled with federal student loan debt.

An average of 26% of those borrowers are not making progress, have defaulted or are considered delinquent, according to federal data. That means roughly 83,200 people in the state, at least, will be under the radar of the Trump administration in its crackdown on federal student loan repayments.

More still are likely approaching default, which happens when a borrower doesn’t make a loan payment for at least 270 days. The federal government has anticipated that will roughly double the amount of debtors in the country who will be under the gun to repay.

The U.S. Department of Education announced its efforts late last month to resume collections, starting May 5, on all defaulted student loans. Those payments and accompanying interest had been paused during Trump’s previous presidential term with the COVID-19 pandemic. That pause was extended by President Joe Biden until 2023, when payments restarted.

But forced collections never resumed. Now, the government wants to claw back what is owed.

That will include reclaiming funds from a borrowers’ tax refunds or Social Security benefits. The administration is also pushing to be able to garnish wages.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon in a statement.

The action is the latest in a string of federal moves targeting education. That includes dismantling the Department of Education and moving federal grants and loans for students under the Small Business Administration.

Under Trump’s direction, colleges and universities have also faced millions of dollars in lost research funding. The president also targeted — and then reversed course on — deporting international students in higher education. And he’s frozen federal funds for institutions he disagrees with.

But the federal loan repayments are the first to land directly on the doorstep of the 45 million in the United States who have pursued higher education and relied on loans to cover the cost. And it’s prompting wide fear and worry.

Overall, $1.6 trillion is owed. About 5 million borrowers are currently in default, with another 4 million set to meet that threshold soon.

Utahns account for $10.9 billion of the total owed, or about 7%.

While Owens is an even tinier fraction of that, her stress over it, she said, is big.

‘Squeezing blood from a stone’

The Trump administration has said its goal is to collect money owed to the government.

Marshall Steinbaum says that isn’t likely to pan out. The assistant professor of economics at the University of Utah has extensively studied student debt and loan programs. Most student loans, he said, will never be repaid.

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The U.S. has a “giant underperforming student loan portfolio,” Steinbaum says, largely because wages have remained stagnant. Students take out a loan with the hope of repaying it after college, but jobs don’t pay enough for them to do so.

Students have long been assured that the cost of school will be worth it, but that hasn’t really been the case since the Great Recession, Steinbaum said, when loan defaults increased dramatically.

In a piece for The New York Times, along with researcher Laura Beamer with the Jain Family Institute, he detailed that 2013 marked the first time a loan cohort owed more money than they had originally taken out. Simply put: They couldn’t even keep up with interest alone.

“The loans are given out on generous terms, but not collected on generous terms,” Steinbaum said.

At least during the federal student loan pause, Steinbaum said, interest wasn’t accumulating and further drowning debtors.

Owens is one example of that. She took out $12,000 in student loans to finish her undergraduate degree at Utah State University, where she graduated in 2023 with a bachelor‘s degree in nutrition.

Upon finishing, she said, she couldn’t find work in the field and instead spent a year at a medical device company. Her loan repayments restarted during that time, with most kicking in six months after graduation. And she racked up about $600 in interest.

Owens was able to pay off only about $400 toward the total before she decided to return to school in fall 2024, which she hopes will lead to more work opportunities.

Steinbaum sees a lot of borrowers in Utah and across the country facing the same situation. But even if the government takes their wages or Social Security, there just isn’t enough money to cover the debt. (Wage garnishment, for example, is usually capped at 15% per paycheck.)

“I don’t perceive a lot of money is going to come through the door. It’s just going to increase misery for borrowers,” he said. “It’s basically squeezing blood from a stone.”

He instead predicts more people will stop going to college in the first place, or stop seeking more advanced degrees, fearful about not being able to earn loan money back.

A look at Utah’s student loan debt

Geoff Landward, the commissioner over the Utah System of Higher Education, is worried about that, too.

“I think the answer is definitively yes,” he said. “That is a concern.”

Utah, though, he notes is better positioned than many other states. It ranks No. 15, for instance, in having the least student loan debt when calculated per borrower, at $33,872. That’s less than the national average of $36,092.

Most borrowers in the state also owe less. About 7,100 owe more than $200,000, but the majority fall under $60,000.

Landward said multiple factors influence Utah’s relatively good standing. Chief among those, he believes, is that tuition rates at the state’s eight public colleges and universities are among the lowest in the nation.

“Affordability does dictate the amount of debt that people take on,” he said.

And the Utah Board of Higher Education is dedicated to maintaining that.

He added that Utahns also tend to have an aversion to debt. That likely stems culturally from the state’s predominant faith, The Church of Jesus Christ of Latter-day Saints, which urges members to be self-reliant and avoid debt.

Private school Brigham Young University, which is operated by the LDS Church, has the highest percentage of student loan borrowers in the state who have fully paid off their debts at 27%. The next highest is tied at 16% for both Snow College and Westminster University.

For his part, Landward said, he is focused on making sure that college degrees here are worth the financial investment. Higher education, he added, is the best way to give students upward mobility.

If students are taking on debt to attend, “then we also should have the proportion of responsibility of ensuring they have a return on investment,” he noted.

The state higher education board previously ran its own loan program — both issuing and collecting on them. Under former President Barack Obama’s administration, a policy change shifted the preference for those to be administered at the federal level.

So Utah got out of the business, Landward said, and sold its portfolio. That created an endowment that’s now at about $280 million. The plan is to use it toward scholarships, removing a barrier for students to attend.

Steinbaum agrees that’s one way to help the situation.

Typically, he said, schools are propped up by three key pieces of revenue, like the legs on a stool: student tuition, state appropriations and money from the federal government — through grants and research.

But this year, the federal leg has been cut, and in Utah, the state leg was shortened when the Legislature cut $60.5 million in funding for public higher education.

How the state’s public colleges stack up

The Salt Lake Tribune reviewed federal student loan data for all of Utah’s public schools; a handful of for-profit colleges; and the two main private schools, BYU and Westminster.

Across the board, the percentage of borrowers making progress on paying back federal student loans — hovering between 20% to 30% — roughly matches the percentage who are not.

On average, an additional 5% have defaulted and 2% are considered delinquent (missing several payments). Both hurt a person’s credit score.

Another 15% are in forbearance (a temporary pause during financial difficulty) and the same amount are in deferred payment plans.

Only 13% of those in the state have paid in full, according to numbers compiled from the U.S Department of Education.

Steinbaum says that closely matches breakdowns in other states. The data doesn’t include private or personal loans, though, which many students also rely on.

In terms of public schools, the University of Utah on average costs the most annually at $13,172. That’s based on tuition and fees, minus the average grants and scholarships a student gets.

But students there also see the highest median annual salary upon graduating at $67,170. And it has the lowest percentage of defaulted loans in the Utah System of Higher Education at 3%.

Anthony Jones, the executive director of scholarships and financial aid at the U., said the school has been preparing students and alumni for collections to start. It also offers services through its Financial Wellness Center to help people understand their repayment obligations and options.

Utah State University recently introduced its own net price calculator to help students see how much attending will actually cost them — once they factor in all financial aid options. It follows fairly close behind the U., but students who go there tend to leave with about $5,000 less in debt, on average.

The loan default rate there is 5%, though, matching the state average.

Weber State University and Utah Valley University punch above their weight, outpacing USU for median earnings. But both also graduate students with slightly more debt.

Snow College, the small two-year community school in central Utah, appears to have the highest number of students receiving federal loans at 43%.

But Cody Branch, the institution’s vice president for student affairs and enrollment management, said that’s actually due to an accounting error from the 2021-2022 academic year. He’s not sure why the school reported then that 66% of its students had federal loans; he believes it was closer to the college’s average of 20%. Snow hasn’t been able to have it corrected.

Overall, though, the school has the least median debt after graduation at $7,000.

“Our institutional aspiration is for students to graduate debt free, gain work experience and develop a plan for the future,” Branch said.

Salt Lake Community College, which operates similarly to Snow, has about $8,000 in median debt per student after graduation. But it has the largest ratio of public school borrowers who have defaulted on their federal student loans at 11%.

That means of the public schools in the state, it has the highest percentage who will be affected by the Trump administration’s repayment efforts.

Examining private and for-profit schools

For-profit colleges in the state tend to have the highest overall cost and, accordingly, the most debt for students upon graduation. They also have higher percentages of students taking out loans in the first place.

Nightingale College, a private for-profit nursing school based in Salt Lake City, is among the top on the list. Education Department numbers show the school’s average cost estimate to be nearly $30,000.

Overall, 74% of students there receive federal loans, falling only behind Neumont College of Computer Science, which has the highest rate in the state at 88%.

Of those at Nightingale, 21% are making progress on repayment. That’s compared to 63% who are not, or are in deferment or forbearance.

Nightingale specifically has the most borrowers in forbearance of any school in the state at 27%. Steinbaum says that for-profit schools tend to attract more low-income students, so that’s not surprising.

Officials at the school said they expect some challenges as student loan repayments resume — which they say they provided input on to the federal government before the action started. The school has hired a staff member to support soon-to-be graduates and former students with their finances.

That includes “specialized outreach to former learners, helping them understand repayment options and avoid default,” said Chief Financial Officer Thomas Reams in a statement to The Tribune. “This allows us to support our alumni, protect our institutional eligibility and ensure we meet federal compliance expectations.”

Private schools are developing similar tools. To help students determine the real costs of attendance, Westminster University, like USU, also recently released an individualized calculator. The hope, said Erica Johnson, vice president of enrollment, is to increase transparency and help with financial planning.

It’s about “presenting information in a way that students and families can get their heads around, can understand,” she said, so they can make the best choice for them.

Westminster has a high sticker price at about $20,000 per semester. But Johnson said all first-year students receive some kind of financial aid, so that’s not what’s really paid.

Federal data also shows the school has a relatively high amount of borrowers who are making progress toward repayment at 32%. Only 3% there have defaulted.

What’s next for this Utah student?

Owens, 27, is glad she went back to the U. for her master‘s degree. But that doesn’t mean it’s been easy.

She’s learning how to work with manufacturing companies — such as oil and gas — to ensure worker safety. That includes checking for air pollution, monitoring wastewater, holding fire drills and responding to on-site injuries.

“It’s hard, but I do really love it,” she said.

Students in the program currently receive full federal funding because it’s a needed job the government has said is highly valuable. But the Trump administration could cut that support.

The president has pushed to reduce the National Institute for Occupational Safety and Health, or NIOSH, which oversees workplace safety in the United States and the money that Owens receives for her two-year program.

If that happens, Owens isn’t sure how long she will be able to keep playing the game.

Staying would mean racking up more student debt. If she left, her student loan payments would resume, and she wouldn’t qualify for the higher-paying job she hoped would finally bring her family some financial stability.

Correction • May 9, 11:25 a.m.: The story has been updated to correct the name of Nightingale College’s chief financial officer, Thomas Reams.