The federal government is moving to collect on defaulted student loans after a nearly five-year pause dating back to the start of the COVID-19 pandemic.
Financial experts say letters have already begun going out to some borrowers who haven’t been making payments, giving a 30-day warning that their paychecks could be garnished.
Up to 15% of post-tax income could be taken from borrowers if they are more than 270 days past-due on their loan payment and considered in default. Once a garnishment hits, the process is automatic, with the defaulter’s employer deducting the amount directly from their paycheck.
Borrowers is strongly urged to check with their student loan providers, even if they haven’t received a letter, because not receiving it is not considered an excuse for avoiding a garnishment.
If you don’t know who your loan servicer is, you can go to student aid dot gov and there is information there that can help you figure out who is servicing your loan, and then you can call that company and try to set up payments so that you can get back in good standing before the garnishment begins. If you wait and if the 30 days lapse after that letter is sent, then wage garnishments will begin and it is very difficult to stop them once they have started.
Along with wage garnishments, tax returns could also be taken to help settle the outstanding debt.
The Education Department said borrowers can explore repayment or rehabilitation options before garnishments begin.
Source: WBKO
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