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Fox 5 is watching your wallet tonight, and if your student loans are in default, they could be about to go into collection, and you could even have your wages garnished
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Fox 8, Kendall Green is here with how this could affect millions of borrowers currently in default. Kendall
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Hey, good evening, Natasha. Out of the more than 262 million adults in the U.S., about 42 million have student debt
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And these sweeping changes in just a matter of weeks could affect more than 60 percent of those borrowers, either behind or in default on their payments
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After a five-year-long pause on student debt collections, the Trump administration is forcing borrowers to pay up, beginning as early as next month
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No student loan has been referred to collections since March of 2020
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That comes to an end. Tuesday, White House Press Secretary Leavitt announced on May 5th
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the Department of Education will begin involuntary collections from borrowers with federal student loans in default
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The feds report the country's student loan debt has reached nearly $1.6 trillion
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among nearly 43 million borrowers, with fewer than 4 out of 10 borrowers current in repayment
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Millions will feel this. The pandemic era pause, triggered by Trump and extended multiple times under the Biden administration
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reached its final grace period in October last year. Since then, the volume of borrowers in default skyrocketed to more than 5.3 million
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as data shows 4 million borrowers are between 3 and 6 months behind on payments Now all in that category are subject to have government payments held back including tax refunds and federal salaries Going into default it takes
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270 days, right? You're delinquent if you're one day late. It takes 90 days for them to report to
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credit agencies. But the immediate impact of wage garnishment or taking away your tax refund
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or however much you get from Social Security, some people live on that
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Debt cannot be wiped away. It just ends up getting transferred to others
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After a 30-day notice, the government plans to garnish wages for borrowers in default
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calling the ballooning debt an unfair liability to taxpayers. The best advice from Andrew Pintus, a certified student debt counselor at Bankrate
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is for borrowers to consider rehabbing their loans by making nine on-time payments within a 10-month period
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If that's not doable for you, as it won't be for many federal student loan borrowers, the more realistic option is to consolidate your federal student loans with your federal student loan servicer
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And then ideally, to get that lower monthly payment, apply for an income driven repayment plan
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Now that experts share those income driven loan repayment plans can offer lower payments and ultimately help borrowers get out of the default
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But he also advised borrowers get in touch with their loan providers quickly as non-communication will only trigger more collections
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Natasha. All right, Kendall, thank you so much
