The Trump administration paused student loan payments due to the pandemic, but Education Secretary Linda McMahon now emphasizes the importance of resuming payments, as over 5 million Americans are in default. President Trump criticizes Biden for not reinstating them sooner. Starting May 5th, the Department of Education will resume collecting defaulted loans, with 60% of borrowers currently behind on payments. Experts advise borrowers to take proactive steps, like contacting loan servicers to arrange payment plans, to avoid severe consequences like wage garnishments. Ignoring the issue could lead to significant financial problems.
At the onset of the pandemic, the first Trump administration paused student loan payments. Now, Secretary of Education Linda McMahon declares it’s time for repayment as over 5 million Americans have defaulted on their loans.
Former President Trump believes that President Biden should have reinstated payments much earlier.
This week, the Department of Education revealed that it will recommence the collection of student loan debt currently in default.
According to the Department of Education, 60% of borrowers are overdue on their payments, with over 42 million individuals holding some form of debt.
The new repayment policy will take effect on May 5th.
On Wednesday, McMahon appeared on FOX News to discuss available resources.
What they’re saying:
“With nearly $1.7 trillion in student debt, and no collections taking place since March 2020, it’s time to hold individuals accountable for their debts,” McMahon stated. “We’ve extended our hours for assistance, and we even have an AI tool available to answer inquiries.”
FOX 4 reached out to financial expert Derrick Kinney to discuss when borrowers should start worrying about wage garnishments.
“If borrowers miss 270 days of payments, even though the government suspended them, they are still labeled as delinquents. Prompt action is essential. Small proactive steps can prevent larger issues; that’s the key,” Kinney noted. “This administration is not looking for ways to forgive debt, so the reality is that repayment is inevitable. It’s better to start paying willingly rather than reluctantly, as doing so will benefit you financially in the long run.”
What you can do:
Kinney emphasized the necessity for borrowers to act soon.
“Contact your loan servicer and express your intent to either start making payments or to set up an income-driven repayment plan. Taking action significantly reduces the likelihood of aggressive measures being taken against you,” Kinney advised. “Ignoring the situation only sets you up for major complications. The government seeks action, plain and simple.”
While the Department of Education’s immediate focus is on defaulted accounts, all borrowers should establish a payment plan.
Failure to resume payments could lead to the government garnishing tax refunds, pensions, and wages.
The Source: Information in this article was provided by the Department of Education and interviews with Derrick Kinney.