For the first time in five years, the Department of Education says it will resume collections on defaulted student loans. Starting May 5, the department can start taking funds from borrowers’ tax refunds, Social Security benefits and eventually wages. The change will impact 5.3 million borrowers who went into default before the pandemic. NPR spoke with experts on the topic. Here’s what they say you should know:
🎓 The department says it will reach out to the borrowers who are in default before May 5, via emails and social media posts, “reminding them of their obligations.”
🎓 People can check their status by logging into StudentAid.gov. The dashboard should show how much you owe. If you are in default, there should be a warning message.
🎓The three primary ways to get out of default are to repay the loans in full, loan consolidation and rehabilitation. The consolidation option involves paying off the defaulted loans with new repayment terms. Rehabilitation requires the borrower to make multiple consecutive on-time payments of an amount based on income. |