After a five-year suspension, the Trump administration has resumed wage garnishments for defaulted federal student loans. This action affects approximately 5.3 million borrowers across the United States. The process involves the government taking a portion of a borrower's paycheck to cover outstanding loan debt.
The Department of Education paused these collections several years ago. Now, with the resumption of garnishments, many borrowers will see a reduction in their net income. Experts warn that this could create financial hardship for families already struggling to make ends meet.
Borrowers facing wage garnishment have options. They can explore loan rehabilitation, which involves making a series of on-time payments to bring the loan back into good standing. Another option is loan consolidation, which combines multiple federal loans into a single new loan with potentially more favorable terms. Contacting the loan servicer is a crucial first step to understand available options and prevent further wage garnishment.
Student Loan Wage Garnishments Resume for Millions
The federal government has restarted wage garnishments for over 5 million Americans with defaulted student loans after a five-year pause. This means money could be taken directly from borrowers' paychecks to repay the debt. Experts say this action could significantly impact household finances, especially for lower-income individuals. Borrowers are encouraged to explore options like loan rehabilitation or consolidation to avoid wage garnishment.
Source: Read the original article at NBC