Millions could face wage garnishments-here’s how to avoid it
If you’ve been ignoring those student loan notifications, now’s the time to pay attention.
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Starting May 5, the federal government will resume collections on defaulted student loans, ending the long-standing pause that began at the start of the pandemic. For millions of borrowers, this could mean wage garnishments, seized tax refunds, and even lost federal benefits.
More than 5 million borrowers are already in default, and another 4 million are dangerously close, according to the Department of Education. That means your loans could be flagged for collection in just a few weeks-if they aren’t already.
Delinquency starts as soon as you miss a payment. Stay in that status long enough-270 days for most loans-and you’re officially in default. For others, like Perkins Loans, you could be considered in default the moment a payment is late.
Think wage garnishment, withheld tax refunds, and your entire loan balance (plus interest) becoming due immediately.
The Department of Education says it’s giving borrowers notice: email alerts and reminders from Federal Student Aid (FSA) are going out now through early May. They’re also encouraging borrowers to contact the Default Resolution Group to explore options like income-driven repayment plans or loan rehabilitation.
But getting help isn’t always easy. Staffing shortages have created long wait times for support. Some borrowers have spent eight hours on hold, according to The Institute for College Access & Success.
Meanwhile, a new repayment system is coming. After a court struck down the Biden administration’s SAVE Plan, a revised version is expected to launch this May. The updated plan aims to simplify income-driven repayment and remove the need for yearly income verification.
Check your loan status at studentaid.gov. If you’re behind and not on a plan, reach out now-before collections start. Acting quickly could save you from a financial spiral that’s hard to escape.
