Student Loan Default Collection Resumes: What Borrowers Need to Know

Resumption of Student Loan Collections

• ⚠️ Collection of defaulted federal student loans is resuming as of May 5th, after a 5-year pause related to the COVID pandemic.
• 🎯 Defaulting typically means missing payments for 270 days or more.

Consequences of Default

• 📈 The government will begin garnishing wages this summer and can garnish state or federal benefits.
• 💳 A defaulted loan can negatively impact your credit report, affecting your ability to secure apartments, mortgages, car loans, and even employment.
• 📊 The Department of Education estimates 5 million borrowers are in default, with an additional 4 million at least 90 days late on payments.

Borrower Guidance and Options

• 💡 Experts advise all borrowers to visit their loan provider's website to confirm their status and update contact information.
• 🛠️ If worried about defaulting, consider income-based repayment plans, deferment, forbearance, or consolidation/refinancing.
• 📞 The DOE's default resolution group can help borrowers understand their options and potentially restore their status through rehabilitation.
• ⚠️ Be vigilant and watch out for student loan-related scams.