The U.S. Department of Education is restarting collections on defaulted federal student loans after a pause since March 2020 due to COVID-19 payment relief measures. With loan payments resuming on September 1, 2023, many borrowers have begun repaying, but around 5 million borrowers have defaulted. This situation may lead to nearly 10 million federal borrowers defaulting on their loans. The collections approach will involve wage garnishments and Treasury payment offsets, emphasizing the need for borrowers to stay informed about their loan statuses and repayment options.
The Department of Education is resuming collections on defaulted federal student loans after a five-year hiatus, affecting nearly 10 million borrowers.
As of September 1, 2023, student loan payments resumed, prompting concerns over defaults among borrowers, particularly those already delinquent for over 270 days.
Collections on defaulted loans will involve wage garnishment and Treasury offsets, not aggressive tactics, prompting borrowers to understand their status and options.
While garnishment has not yet commenced for defaulted borrowers, the Department of Education is preparing to enforce collections, signaling a significant shift in loan repayment management.
Collection
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