Impacted borrowers have been in default since before the pandemic. If you’re still getting a bill from your servicer you’re not in default — yet.
Lead Writer
After a five-year suspension that began in March 2020, the Trump administration is turning the student loan default collections machine back on. Millions of borrowers with defaulted loans are poised to face severe consequences starting on Monday, May 5.
“Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education,” the Education Department said in a press release.
The far-reaching consequences of student loan default can hit a borrower all at once. The government can withhold portions of Social Security checks, take tax refunds and garnish paychecks. Credit scores plummet, making it difficult to buy a house, rent an apartment or get a job. Borrowers can’t get more student loans to go back to school or access loan relief options. Potential costs include court and collections fees.
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