Federal student loan borrowers are about to be hit with some major changes come May 5.
In an “effort to help borrowers to get back into repayment,” the Department of Education has decided that people who have defaulted on their student loans could face a credit score impact and possibly have their paychecks garnished so the money can be recouped.
Since the COVID-19 pandemic, people repaying student loans have had protection from the harsher consequences of not paying the money back. Former President Joe Biden’s administration also set up plans that allowed people to pay based on their income.
President Donald Trump’s administration has been adamant about not giving student loan forgiveness to people who borrowed money from the federal government to pursue their education and the education department doubled down on that in a statement.
“There will not be any mass loan forgiveness,” the Department of Education said in its announcement.
Here’s what people who are paying off student loans need to know.
What is happening with student loans?
The Department of Education, an agency Trump is trying to dismantle, stated that people with student loans that are in default are expected to receive an email from the holder of the loan with an update of their status over the next two weeks.
From there, people will be urged to go with one of three options:
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Department of Education Secretary Linda McMahon said in the statement.
Student loan holders could now move to garnish wages
In a little less than two weeks, loan holders will be able to start the process of taking money from the paychecks of borrowers who’ve missed their payments for 270 days or more. And it’s not just paychecks that they can collect from.
Loan holders will also be able to collect from other federal payments, including tax refunds and Social Security benefits.
How many people in the U.S. have student loans?
More than 42 million people currently have student loans, which equates to more than $1.6 trillion in debt, the department said.
This push for loan repayments is expected to impact 5 million borrowers.
This article originally appeared on Nashville Tennessean: Are student loan holders able to garnish wages? TN part of new changes