President Donald Trump’s administration has recently announced the start of collections and garnishments for individuals who are in default on their student loans. What does this mean, and could you be impacted?
During the 2020 pandemic, the government paused payments for millions of borrowers. This pause was extended under the Biden administration. Now that the current administration is resuming loan collections, many borrowers are left wondering about their status.
To clarify any misconceptions, being in default on your loans means that you have not made any student loan payments for 270 days or longer. However, this does not apply to borrowers who had their student loan payments paused.
Around 40M Americans have student loans
According to NerdWallet, when student loans go into default, the total amount owed becomes due immediately. If you were in good standing with your loan servicer when the payment pause began, you will not be at risk of garnishments.
Currently, approximately 40 million Americans have student loans, and around five million borrowers are in default. If you suspect that your loans are in default, it’s important to contact your loan servicer to discuss potential arrangements.
Additionally, if your loans are in deferment or forbearanceāmeaning that your loan payments have been temporarily postponed or reducedāthen you are not in default.
Please note that it’s important to stay in contact with your loan service provider should anything change or affect you.
