Student Loan Collections Are Back
Hey everyone, here’s your wake-up call! After a long COVID-19 pause, the U.S. Department of Education has resumed collecting defaulted student loans. Millions who enjoyed temporary relief now face a comeback in collections, meaning your paycheck, tax refund, or even government benefits could be on the line 😬.
Only a little over a third of nearly 43 million borrowers have been keeping up with payments. Under the new program, the Treasury Department can withhold entire federal tax refunds, up to 15% of disposable pay, and portions of benefits like Social Security. If you miss payments, your credit score might take a major hit and future loans could become harder to secure.
U.S. Secretary of Education Linda McMahon stated, "American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies." This strong declaration underlines the urgency for borrowers to take action.
Experts, including TransUnion’s Michele Raneri, explain that many miss payments due to financial constraints or simply not knowing how to catch up. With one in five borrowers now seriously delinquent, the situation is proving to be a steep challenge.
Student debt advocates are warning that rising living costs and inflation make this an especially tough time. So, if you’re in the student loan game, it’s time to check your status and plan ahead. Stay informed and proactive—your financial future depends on it! 💪✨
Reference(s):
cgtn.com
