Department of Education resumes student debt collection
The Office of Federal Student Aid at the U.S. Department of Education announced plans to recommence collecting defaulted student loans in May.
More than 5 million borrowers went into default prior to the COVID-19 pandemic and a total of nearly 7 million borrowers may be delinquent on their repayments, according to a news article from NPR. Federal officials stated that the funds will be collected from borrowers’ federal tax refunds, Social Security benefits and wages — and indicated that notices of wage garnishment will be distributed in the summer.
The loss of hundreds or thousands of dollars in income combined with the rising costs of everyday goods could create financial insecurity for many student loan borrowers. As a result, financial experts urged borrowers to begin making monthly repayments and enroll in income-driven repayment plans. Those who are receiving notifications about missed payments should speak with their loan servicers to prevent going into default or delinquency. Borrowers were also advised to visit the Department of Education’s website to determine how much debt they owe, check their student loan status and update their contact information.
The experts recommended that student loan borrowers who are in default consider loan consolidation and rehabilitation. They concluded that the federal student loan program is often flexible depending on each borrower’s unique financial situation.
Read more: NPR
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