The first Trump administration paused paying for student loans at the start of the pandemic. Now, Education Sec. Linda McMahon says it’s time to pay what you owe as more than 5 million Americans have student loans that are in default.
President Trump thinks former President Biden should have resumed them a long time ago.
This week, the Department of Education announced it will resume collecting student loan debt that is currently in default.
The Department of Education says that 60% of borrowers are behind on their payments. More than 42 million borrowers have some type of debt, according to the Department of Education.
The repayment policy takes effect May 5th.
McMahon was on FOX News on Wednesday talking about available resources.
What they’re saying:
“Almost $1.7 trillion in student debt, and none of the collections have been made since March 2020. So it’s time to have people be held accountable again for their debts,” said McMahon. “We have longer hours for them to call to find out if they have other options. We have. Actually, an AI aid that can answer questions for them.”
FOX 4 spoke to money and business expert Derrick Kinney about what point borrowers should be concerned about wage garnishments.
“There’s this number of 270 days that people have gone without a payment. And even though the government said you don’t have to pay; they’re calling those people delinquents. So, you’ve got to take action. The key, though, is, again, small steps can avoid big problems. That’s the secret,” said Kinney. “This is not an administration that’s looking for ways to cancel debt and give people off the hook. So, the reality is you’re going to have to pay for this. You can either come dragging, kicking and screaming, or willingly start to pay what you can. If you do the second option, you’ll be much further ahead long-term financially.”
What you can do:
Kinney spoke about what actions borrowers need to take as soon as possible.
“Call where your loan is held and let them know. Look, I want to begin either making payments or setting up what they call an income-driven payment plan. That way, as long as you’re taking action, the odds of them coming down on you or taking things away from you go down dramatically,” said Kinney. “If you ignore it, you are setting yourself up for a big, big problem. What the government wants is simply action.”
The Department of Education’s focus right now is on default accounts, but anyone with a loan should set up a payment plan.
People who don’t resume payments risk having their tax refunds, pensions, and even wages garnished by the government.
The Source: Information in this article was provided by the Department of Education and interviews with Derrick Kinney.
