The U.S. Department of Education To Resume Federal Student Loan Collections In May

The Biden administration said the would cancel student loans and in four years it didn’t happen as the Biden administration plans were shot down at every turn.  The Trump Administration in four months is not only resuming Federal Student loan collections, the are coming for paychecks with garnishments.

Since the pandemic, federal student loan borrowers have been mostly protected from the harshest consequences of defaulting.  But that is no more.  Some 5 million Americans with defaulted student loan payments will have their loans sent for collections on May 5.

The U.S. Department of Education (DOE) announced that its Office of Federal Student Aid (FSA) will resume collections of its defaulted federal student loan portfolio on Monday, May 5th. The Department authorizes guaranty agencies to begin involuntary collections activities on loans under the Federal Family Education Loan Program.  In addition the DOE plans to utilize the Treasury Offset Program, which can withhold tax refunds and Social Security benefits from borrowers in default. Additionally, administrative wage garnishment may commence later in the summer, allowing up to 15% of a borrower’s disposable pay to be withheld. For federal student loans over 270 days past due (which begins from the date of the first missed payment) the government can garnish up to 15% of disposable income without court permission. 

See what you need to know in the video below.

 

 

 

 

 

 

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