After a lengthy pause, the federal government is restarting student loan collections for borrowers who are in default. This means the Department of Education will once again begin taking action to recover unpaid student loans. Borrowers in default face serious consequences, including wage garnishment, tax refund offsets, and damage to their credit scores.
Several options are available to borrowers looking to get out of default. Loan rehabilitation allows borrowers to make a series of income-driven payments to bring their loans back into good standing. Loan consolidation combines multiple federal loans into a single new loan, which can also remove the default status. It's crucial for borrowers to contact their loan servicer to discuss these options and determine the best course of action.
Experts emphasize the importance of proactive communication. Ignoring the problem will only lead to more severe consequences. Borrowers should gather their loan information and contact their servicer as soon as possible to explore available programs and repayment plans. Taking action now can help borrowers avoid the negative impacts of default and regain control of their financial future.
Student Loan Collections Restart: What Borrowers in Default Need to Know
Federal student loan collections are resuming for borrowers who are in default after a long pause. This means the government will start taking steps to recover unpaid loans. Borrowers in default should understand their options, which may include rehabilitation or consolidation. Experts advise contacting loan servicers to explore available programs and avoid wage garnishment or tax refund offsets.
Source: Read the original article at CBS