TULSA, Okla. — Starting today, millions of borrowers with federal student loans will be required to resume payments after a prolonged suspension due to the COVID-19 pandemic. The U.S. Department of Education has announced that notifications will be sent to approximately 5 million borrowers who have defaulted, defined as not making a payment for 270 days or more.
“Borrowers will be notified via email that their loans are entering involuntary collection unless they start making payments or enroll in a forbearance or deferment program,” the Department of Education stated.
The restart of these payments comes after a pause that began in March 2020, under the Trump administration, and was extended multiple times by the Biden administration. Now, the government warns that those who continue to default may face serious repercussions, including wage garnishment and the interception of state or federal benefits.
According to the Department of Education, an additional 4 million borrowers are at least 90 days late on their payments, inching closer to default status. Jessica Roy, a personal finance columnist for the San Francisco Chronicle, cautions that falling into default can damage borrowers' credit reports and impact their ability to secure housing loans or even employment.
“If your debt gets sent to collections, that goes on to your credit report, and that can impact your ability to get an apartment, a mortgage, a car loan. Even some employers check,” Roy said.
Financial experts recommend that all borrowers visit their loan provider’s website to confirm their payment status and update any necessary contact information. For those concerned about falling into default, it might be wise to consider options such as income-driven repayment plans, deferment, forbearance, or loan consolidation.
In Oklahoma, the average student debt is relatively low compared to national averages, standing at about $39,411. As borrowers prepare to resume payments, officials urge proactive measures to avoid the financial pitfalls associated with default.
For additional assistance, borrowers are encouraged to reach out to their loan servicers and explore the various repayment options available to ensure they stay on track with their financial obligations.
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