According to five people familiar with the matter, Trump administration officials are preparing to impose financial penalties on millions of Americans who default on federal student loans next year. Three of these sources said that the Ministry of Finance is advancing plans and may hire private debt collection agencies as early as November. Sources said that it is unlikely that the relevant plan will be announced to the public before the midterm elections. This previously unreported preparation indicates that the government is preparing to implement a policy that was previously shelved. It was previously put on hold because it was feared that the policy would have an impact on nearly 10 million defaulting borrowers. Various federal agencies within the government have been divided over how to manage this $1.7 trillion student loan asset portfolio. Sources said that last year, the White House Office of Management and Budget assisted the Department of Education in preparing to seize federal benefits and wages from defaulting borrowers; however, Treasury officials stopped this work on the grounds that taking punitive measures against workers would have financial costs. The White House Office of Management and Budget and the Treasury declined to comment. The Ministry of Education said in a statement: “We will not respond to such exploratory inquiries.”

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