Student Loan Defaults: What to Do When You Receive a Notice from the Department of Education

Understanding Student Loan Default

• 📌 A student loan borrower is considered delinquent after missing just one payment.
• ⚠️ After 90 days of missed payments, the government will report the delinquency to credit bureaus, negatively impacting your credit score.
• ⚠️ Technical default occurs after 270 days of non-payment.

Government Recoupment Actions

• 💸 The Department of Education can garnish wages, taking up to 15% of your paycheck without needing to go to court if you are in technical default.
• 🏦 Federal benefits, such as Social Security and income tax refunds, can also be intercepted for loan repayment.

Options for Borrowers in Default

• 📞 The most crucial first step is to contact your loan servicer immediately.
• 🔄 One option is loan rehabilitation, which requires making nine payments over a 10-month period.
• 📊 Many borrowers opt for an income-based repayment plan that aligns with their budget.
• ⚡ Acting quickly is essential to avoid or mitigate wage garnishment and other actions.

Where to Find More Information

• 📺 Jill Schlesinger, CBS News business analyst, provides regular analysis on CBS Mornings and the CBS Evening News.
• 🌐 Additional insights and resources can be found at jillondmoney.com.