The U.S. Department of Education is taking aggressive steps to restart collections on federal student loans that are in default — just as current high school seniors are set to rack up new balances on their path to a college degree.

Currently, around 42 million Americans hold federal student loans and more than 1 million high school graduates will take out new education debt in the months ahead, according to higher education expert Mark Kantrowitz.

By the time they graduate college, these students could each borrow as much as $40,000, on average, in federal and private aid to earn a bachelor’s degree, according to a new NerdWallet analysis of data from the Education Department, up from $37,000 the year before.

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Every year, new students are pumped into the student loan system while many current borrowers struggle to exit it. Despite historic student loan forgiveness efforts under former President Joe Biden, the country’s education debt tab has mostly ticked higher.

“We haven’t been able to get our arms around the college affordability problem more broadly,” said Michele Zampini, senior director of college affordability at The Institute for College Access & Success. “There are new enrollments every semester and the pile up continues.”

Around 45% of 2025 high school graduates will go on to a four-year college, according to NerdWallet, and more than one-third of them will take out student loans to help cover the tab.

College tuition costs have risen significantly in recent decades, averaging a 5.6% annual increase since 1983, outpacing inflation and other household expenses, according to a separate report by J.P. Morgan Asset Management. And families now shoulder 48% of college expenses, up from 38% a decade ago.

“Most people don’t have the money to make those payments out of pocket,” Zampini said.

To bridge the gap, students and their families have been borrowing more, which has boosted total outstanding student debt to more than $1.6 trillion.

In a Wall Street Journal op-ed Monday, U.S. Secretary of Education Linda McMahon said that some institutions make “empty promises to students while pocketing their loan dollars.”

“Colleges and universities call themselves nonprofits, but for years they have profited massively off the federal subsidy of loans, hiking tuition and piling up multibillion-dollar endowments while students graduate six figures in the red,” she wrote.

Deep cuts in state funding for higher education have also contributed to significant tuition increases and pushed more of the costs of college onto students, other reports show.

These days, tuition accounts for about half of college revenue, while state and local governments provide much of the rest, according to the Center on Budget and Policy Priorities. But roughly three decades ago, the split was much different, with tuition providing just about a quarter of revenue and state and local governments picking up the bulk of the difference.

“We’ve haven’t actually seen a good faith effort to work through that comprehensive problem,” Zampini said. “What we’ve seen instead is a bit of an attack strategy on higher education in general.”

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Even as a pause on reciprocal tariffs has been put into effect, consumers are already anticipating the pressures of higher prices.

A majority of Americans — 85% — have concerns about the tariffs, according to a new NerdWallet survey of more than 2,000 individuals conducted this month.

Among top concerns of consumers is that the new policies will impact their ability to afford necessities and that the U.S. economy will fall into a recession.

Meanwhile, cracks in consumer confidence are showing elsewhere.

The University of Michigan’s consumer survey shows sentiment has dropped by more than 30% since December among persistent worries of a trade war. The latest reading for April fell 11% from the previous month, which was worse than expected.

The worries are not unfounded, experts say. Tariffs could cost the average household $3,800 per year, the Budget Lab at Yale University estimates.

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“Most Americans are worried about tariffs, and it’s actually impacting their spending plans,” said Kimberly Palmer, personal finance expert at NerdWallet.

In the next 12 months, a significant portion of individuals surveyed by NerdWallet plan to make changes to their spending habits, with a notable shift towards saving more.

Specifically, 45% plan to spend less on non-necessities, 33% intend to spend less on necessities, and 30% plan to save more money in an emergency fund. However, a smaller percentage, 14%, anticipate paying less on their debts.

The tariffs come as consumers were already struggling to pay for groceries and other essentials amid higher prices, according to Palmer.

“These tariffs are adding to that financial stress and basically forcing people to make some difficult decisions,” Palmer said. That includes scaling back on travel and planned big-ticket purchases like a car.

Some policy experts have questioned how much revenue the duties could bring in, compared to the federal income tax. 

“The tariff tax base is a lot smaller than the income tax base,” Kimberly Clausing, a senior fellow at the Peterson Institute for International Economics, told CNBC.

In 2023, the U.S. imported $3.1 trillion of goods. By comparison, the government levied tax on more than $20 trillion in incomes, according to a report she co-authored last summer.

White House trade adviser Peter Navarro in late March estimated tariffs could raise roughly $600 billion a year.

But that figure “is not even in the realm of possibility,” Mark Zandi, chief economist at Moody’s, told CNBC earlier this month. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”

To compare, the IRS has collected $1.14 trillion in individual income taxes for fiscal year 2025 through March 31, according to Treasury data.

“Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax,” Clausing co-wrote in the Peterson Institute for International Economics report.

Plus, at higher tariff rates, people will buy fewer imported goods, which reduces revenue, Clausing told CNBC: “That’s part of the point of the policy.”

The Trump administration did not respond to CNBC’s request for comment.

The Tax Foundation estimates that a 10% universal tariff would raise $2.2 trillion through 2034. However, the same tariff would reduce U.S. gross domestic product by 0.4%, which impacts revenue.

The International Monetary Fund on Tuesday reduced 2025 U.S. growth projections to 1.8% from 2.7% based on trade tensions.