The U.S. Department of Education announced that wage garnishment for federal student loan borrowers in default will resume in October 2023. The department also indicated that Social Security benefit offsets could start as early as August. The memo highlights the impact of loan defaults, noting approximately 5.5 million borrowers were in default by late 2024. While the Biden administration took steps to protect Social Security benefits and offer repayment options, the future handling of these measures under the new administration remains unclear.
Federal student loan borrowers who've defaulted on their loans may see their wages garnished starting in October of this year, according to the Education Department memoFor roughly the past five years, federal student loan borrowers who fell behind on their bills didn't need to worry about the usual consequences, including the garnishment of their wages and retirement benefits.obtained by CNBC, dated Jan.
It may be up to the new administration under President Donald Trump to decide how to handle the resumption of collections, experts said. However, the department under President Joe Biden took some steps to help defaulted borrowers.Currently, federal student loan borrowers need to exit default before they can access any of the income-driven repayment plans, including the IBR.
The White House and the U.S. Department of Education did not respond to a request for comment on how the Trump administration plans to handle those measures.Borrowers who are already in default should contact their loan servicer"right away" to talk about resolving the issue, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
Rehabilitating involves making"nine voluntary, reasonable and affordable monthly payments," according to the U.S. Department of Education. Those nine payments can be made over"a period of 10 consecutive months," it said.
STUDENTLOANS DEFAULT COLLECTION INCOME-DRIVENREPAYMENT SOCIALSECURITY
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