After a five-year pause, the U.S. government is restarting collections on defaulted federal student loans. This means if you have a defaulted federal student loan, the Department of Education can now take actions to recover the money you owe.
What does this mean for borrowers?
* **Wage Garnishment:** The government can take a portion of your paycheck to repay the loan.
* **Tax Refund Offset:** The government can seize your tax refund to pay down the debt.
* **Social Security Offset:** A portion of your Social Security benefits can be taken.
Brent Evans, an expert from Vanderbilt University, emphasizes the importance of understanding your options. He suggests exploring programs like loan rehabilitation, which allows you to get your loan out of default by making a series of on-time payments. Loan consolidation is another option, where you combine multiple loans into a new one, potentially with more favorable terms.
It's crucial to contact your loan servicer immediately if you are unsure about your loan status or repayment options. Ignoring the issue can lead to severe financial consequences. Resources are available online through the Department of Education's website to help borrowers navigate this complex process and avoid further financial hardship.
Federal Student Loan Collections Restart: What Borrowers Need to Know
Federal student loan collections are resuming after a five-year pause. This means the government will start taking action to recover defaulted loans. Experts recommend borrowers understand their options, including loan rehabilitation and consolidation, to avoid wage garnishment or tax refund seizure. Vanderbilt University's Brent Evans offers key insights for navigating this transition.
Source: Read the original article at CBS