Student loan repayments resume for millions of borrowers

More than 5 million people are currently in default when it comes to their student loans, according to CNBC

And on Monday, the federal government will resume collection efforts. Currently, more than 42 million Americans have student loan payments

That debt amounts to about $1.6 trillion. Of those 42 million, 5 million are in default

As a result, the federal government can try to recoup that money by going after debtors' paychecks

income tax refunds, Social Security benefits, or disability. Collection efforts have been on hold for several years

as the Biden administration tried to give relief to those struggling to make payments

Millions of borrowers were on the Biden administration's save repayment plan. However, a federal appeals court blocked the save plan in February

Plaintiffs argued the Biden administration was trying to find a way to forgive student loan debt on the heels of the U.S. Supreme Court

striking down debt cancellation in 2023. Save reportedly stipulated lower monthly payments

and quicker debt elimination for some borrowers with small balances. The appeals court ruling sent borrowers into interest forbearance That policy is now ending Many of those borrowers are now forced to switch into other repayment plans The Trump administration has gotten rid of forgiveness

for some student loan repayment plans and eliminated staff at the Department of Education

CNBC reports many of the laid-off employees assisted borrowers, and this has led to long wait times on the phone

for those seeking advice and help. The new administration has been critical

of Biden's efforts to give financial relief to those who had access to a college degree

Secretary of Education Linda McMahon said, quote, Americans will no longer be forced to serve as

collateral for irresponsible student loan policies. Mike Pierce, the executive director of the Student

Borrower Protection Center, countered that restarting collections, quote, will further fan the flames

of economic chaos for working families across the country. Credit scores are another concern

The Federal Reserve warned in March that more than 9 million borrowers who are late on their payments could see their score drop by more than 170 points

Such credit scores affect a person's ability to borrow money, with a score of 670 or higher considered to be good

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