That’s not necessarily a surprise — President Donald Trump’s Department of Education restarted collections on defaulted student loans in May after a five-year pause, meaning borrowers are once again subject to negative credit reporting and the withholding of federal benefits, like wages.
The New York Federal Reserve’s quarterly report on household debt and credit showed how stark the surge in delinquencies for student-loan borrowers is — it found that 10.2% of student borrowing was serious delinquency in the second quarter, which is more than 90 days past due. For borrowers above the age of 50, the serious delinquency rate ticked up to just over 18%.
While there’s still time for borrowers in delinquency to avoid default — which typically happens for federal student loans after 270 days — it’s a step closer toward the most severe consequences of defaulting, which include wage garnishment.
A Department of Education spokesperson told Business Insider that the department “expects wage garnishment to resume later this summer,” and did not provide a specific date. The department also previously paused garnishment of Social Security benefits in early June. While it did not specify the length of the pause, Federal Student Aid’s debt resolution website said those garnishments will resume “sometime this summer.”
About 5 million borrowers are currently in default, and a recent analysis from credit reporting firm TransUnion found that of the 5.8 million newly delinquent borrowers as of April, 1.8 million of them could default in July, with an additional 1 million entering default in August and 2 million more in September.
“That number is either high because people cannot afford to pay their student loans, or don’t think they can afford to pay their student loans, or people can afford to pay their student loans and they’re just either choosing not to, or don’t know they need to,” Joshua Turnbull, senior vice president and head of consumer lending at TransUnion, previously told Business Insider.
Once a borrower enters default, they have three options to return to good standing. The first, loan consolidation, allows borrowers to consolidate their defaulted student loans into a direct consolidation loan, but the record of the default would remain on the borrower’s credit history.
In contrast, loan rehabilitation would remove a borrower’s default status from their credit reports, but it’s a lengthy process; borrowers have to agree to make nine payments within 20 days of the due date over a period of 10 consecutive months, and wage and benefits garnishment would continue during that period. Borrowers can also file for bankruptcy, which would halt benefits garnishment.
The department recommended that borrowers seek out income-driven repayment plans to help them make payments. However, those plans are undergoing a major overhaul — Trump’s spending law eliminated the SAVE plan, which enrolled 8 million borrowers, and replaced existing plans with two less generous options set to go into effect in July 2026.
Some borrowers previously told Business Insider that they’re struggling to plan financially due to the uncertainty with their payments. Holly Atkinson, who voted for Trump, said she doesn’t see herself being able to retire if her student-loan payments go up.
“I don’t regret voting for him, but what I’m seeing right now makes me very uncomfortable,” Atkinson said. “We’re all in limbo right now, and I don’t like being in limbo.”
Everybody wants to be Ryan Reynolds. Donald Trump wants to be Ryan Reynolds. The “SmartLess” podcast guys want to be Ryan Reynolds. Even Klarna wants to be Ryan Reynolds. I don’t mean they want to star in “Deadpool” or marry Blake Lively (though neither of those is a bad deal). I mean that they’re all slapping their brands on mobile phone networks in an attempt to make a little extra bank.
If you’re familiar with Mint Mobile, a mobile phone network that offers inexpensive prepaid plans, it’s probably because you’ve seen Reynolds in an ad for it. The actor-turned-entrepreneur bought an estimated 25% stake in the company back in 2019, positioned himself as its spokesperson, and then sold it to T-Mobile for $1.35 billion in 2023, with Reynolds reportedly making $300 million off the deal.
The concept of Mint Mobile isn’t new: Virtual mobile network operators, which are telecom companies that offer mobile services without owning their own network infrastructure, like towers and stations, have been around for a long time. Some examples, besides Mint, include Cricket Wireless and Boost, though the latter is becoming a full-on wireless carrier and investing in its own 5G network. Reynolds offered a new spin by successfully attaching a big-name brand or celebrity to one. His achievement seems to have inspired others to get in on the game, including the president, some podcast hosts, and a buy-now-pay-later company.
“It’s all Ryan Reynolds’ fault. Sort of,” says Avi Greengart, the founder and lead analyst at Techspontential, a research and advisory firm.
In June, the Trump Organization announced the launch of Trump Mobile. Its website says the service will offer “All-American performance” on a $47.45 a month plan that includes unlimited talk, text, data, and calls to 100 international destinations. The Trumps are also selling a $499 gold-colored phone to accompany the plan.
Everyone else on this list is thinking that if Ryan Reynolds can do it, why can’t they?
The same month, Will Arnett, Jason Bateman, and Sean Hayes, actors and the hosts of “Smartless,” said they are starting SmartLess Mobile, which promises to be “direct-to-consumer, data-sane, and refreshingly BS-free.” Their website boasts, “Friends don’t let friends overpay.” SmartLess’ value proposition is that it offers inexpensive, limited data plans that start as low as $15 a month. The argument is that most people have plans that give them unlimited cellular data, but they don’t actually need all that download capacity, given how widely available WiFi is, so they wind up overpaying.
“The quick math is about half of the country use 10 gigs or fewer, but it’s almost impossible not to buy unlimited,” says Paul McAleese, the CEO of Smartless Mobile and a mobile industry veteran. “Why we did it is because we recognize that gap, that data gap, which is really unique compared to any other product category. You don’t go into the grocery store and buy 40 gallons of milk and consume two and then do it again the next month.”
As The Wall Street Journal noted around that time, celebrity cellular brands seem to be everywhere. Consumer brands are joining in, too. Klarna, the Sweden-based buy now, pay later company, is launching a mobile network of its own, too. In June, it invited consumers to sign up for a waitlist to join its $40-a-month plan. It may seem strange for an installment lender to get in the wireless game, but the company says it’s a step in continuing to build its “neobank offering.”
“Everyone else on this list is thinking that if Ryan Reynolds can do it, why can’t they?” says Craig Moffett, a cofounder and senior research analyst at MoffettNathanson, an equity research firm.
“It’s a sign of the times that every celebrity’s reason for getting up in the morning is to think of ways they can monetize their celebrity,” Moffett says.
Mobile virtual network operators, which industry insiders call MVNOs, buy excess network capacity in bulk from major carriers — AT&T, Verizon, and T-Mobile — and sell it under their own brands. They profit from the differential between the wholesale rate they get and the amount they charge customers.
“It is a capital-light alternative without having to invest considerable sums in acquiring a licence, constructing a network, and so forth,” says Paolo Pescatore, a telecom analyst at PP Foresight. He says that it can also work for brands that have a similar business to tack on an extra service for their customers, such as Comcast’s XFinity Mobile, which it can tie in with its broadband service.
For carriers, MVNOs are a way to make money off of capacity they’re not using and try to reach niche markets they may not be able to connect with on their own — customers of different demographics, who speak different languages, and who have different interests. Their brands are very general, and in their marketing, they have to appeal to the general population.
It’s low risk. If the thing fails, no harm, no foul.
“Big carriers are not the most creative kind, and their advertising focuses on big customer segments. They don’t have the time, effort, and focus to go after smaller customer segments,” says Roger Entner, the founder and lead analyst at Recon Analytics, a research and analytics firm. “It’s low risk. If the thing fails, no harm, no foul.”
MVNOs are just a small sliver of the mobile market. Entner estimates there are about 15 million MVNO customers in the US (that excludes people who use MVNOs tied to cable companies, which are an additional 19 million or so). By comparison, the major carriers have upwards of 340 million.
Anastasia Kārkliņa Gabriel, the author of “Cultural Intelligence for Marketers,” says that because consumers tend to distrust the big telecom players, an MVNO may signal a “perception of independence” for potential users. It gives an “illusion of being separate from the major telco brands,” she says, even if that’s far from the case. Klarna is working with AT&T, SmartLess is with T-Mobile, and the Trump Organization says they’re working with all three major carriers.
For the brands and individuals trying to launch mobile networks, the hope is that they have enough clout with their existing fan bases to get them to switch networks and sign up. Maybe you love Jason Bateman so much you feel like you have to have his phone plan, or you’re so entrenched in Klarna’s payments system and app, you switch your network to them. Or, in the case of the Trump family, you’re MAGA. And given the president’s long history of putting his name on things and promoting them, from buildings to steaks to wine, the move seems like a natural extension.
“The only surprising thing about Trump Mobile is that he didn’t try this already,” Greengart says.
Trump Mobile didn’t respond to a request for comment.
McAleese, from SmartLess, says that while he’s aware this may look like following in Reynolds’ footsteps, that’s not what’s going on. Arnett served as a spokesperson for the Canadian company Freedom Mobile, which he also ran, back in 2018. “Will did that job, frankly, before Ryan ever did,” he says.
Just because celeb-affiliated mobile networks are blooming does not mean they will flourish. It’s a tough business to be in. ESPN failed at its MVNO efforts two decades ago, even with all the power of, you know, ESPN — though that attempt was also before the iPhone existed.
It’s an easy business to start, but it’s a hard business to operate, Moffett explains. “The MVNO network operator provides almost everything you need to get started. But once you spend money on marketing and customer service, it turns out to be a really tough way to make money,” he says. “To succeed, you need to achieve meaningful scale, and very, very few MVNOs ever do.”
Phone plans are sticky. It takes time and effort to switch your carrier from one brand to another, though the barrier is getting a bit lower these days. It’s especially difficult if your phone plan is how you’re paying off your device, or you’re on a family plan with multiple lines. Many MVNOs don’t offer plans with more than one or two lines, and few help customers finance their devices.
Where a lot of them run into a buzzsaw is when there’s not enough differentiation going on.
As much as people may idolize certain celebrities or relate to certain brands, it’s just not clear that they do so enough to want their entire consumer lives to reside in their ecosystems. Beyond the branding, a lot of these networks aren’t particularly special in terms of the price or service they offer. Maybe they’ll get some people, via social media posts and ads, but it may not be enough to grow and sustain a thriving business operation.
“Where a lot of them run into a buzzsaw is when there’s not enough differentiation going on,” Entner says. “They bring nothing unique to it.”
He was skeptical of Klarna’s move, too. “It’s a lower-cost acquisition channel, because if you’re already paying off your burrito, they can also say, ‘Hey, by the way, I know you’re broke. Here’s cheap service on top of it,'” he says, referring to Klarna’s BNPL deal that allows people to break up a DoorDash order into multiple installments. “‘I know so much about you, so I can tailor my offer exactly for you.’ That’s the logic. I probably don’t agree with it, but knock yourself out.”
A Klarna spokesperson says in an email that “unlike most new MVNOS, we’re not starting from scratch, nor are we jumping on the bandwagon” and that its mobile offering has been in the works for many months as part of a multiyear strategy. “We’re not trying to ‘win’ mobile or become the biggest carrier — this isn’t about scale for its own sake,” the spokesperson says. “It’s about solving a very real problem for the tens of millions of consumers who already trust Klarna to help manage their finances.”
SmartLess’s McAlease says they “wish everyone well” who’s trying to launch an MVNO right now, because competition is good for the industry, but “they’re just kind of on that unlimited train, and that might work for them and for their audience.” Initial marketing efforts have focused on the SmartLess guys, for obvious reasons — you’ve got three big celebrities and a giant podcast in the mix, so why not? But it will soon shift more to what actually differentiates it.
“You’re going to start seeing much more product- and price-focused things over the course of the next while,” McAelase says. “It’s always tricky for MVNOs to break through the noise, and we’re fortunate to have a brand and principles that are happy to do that.”
Pescatore says that MVNOs have been more successful in other countries, such as the supermarket Tesco’s mobile network in the UK. But it’s challenging. “There are opportunities in a mature market like the US, given the price of existing services from mobile network providers. Ultimately, it needs to tightly integrate and complement the existing service and offer something truly novel to attract subscribers,” he says.
The track record of these projects working out may not deter brands and public figures from trying. Entner says he knows of multiple MVNOs that are in development. Apple has long faced speculation that it might launch an MVNO, though it always denies it. Apple did not respond to a request for comment.
Will all these projects work out? It seems unlikely, but it could happen. Some of these packages are pretty cheap, and hey, if you like some actor enough to switch your cellphone plan for them, by all means.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.
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