Federal student loan in default? Act NOW to avoid wage and tax refund garnishment
UPDATE: On January 16, The U.S. Department of Education announced that it will delay the implementation of involuntary collections on federal student loans, including Administrative Wage Garnishment and the Treasury Offset Program. While borrowers now have a little more time to figure out loan repayment options, it’s crucial you act sooner than later to protect your finances, as the government has not said exactly how long this pause will last. Schedule an appointment with our student loan experts at College Now at cngc.org/appointment.
Federal student loan borrowers will need to take action now on their repayment plans due to recent changes by the U.S. Department of Education. For the last few years, the government paused many of its collection rules to help people during the pandemic, but that break has ended. With standard delinquency and default collection processes resuming, borrowers who miss payments, or who are already in default, may see escalated collection activity, including administrative wage garnishment and the complete reduction of federal payments.
For those whose loans are currently in default, the federal government is expected to begin wage garnishments this month. This means that the government can require employers to withhold an employee’s earnings (all or portion of a paycheck) to pay back the loan. With tax season upon us, the federal government also recently stated that an individual’s federal tax refund may also be withheld in order to pay back the student loan, via the Treasury Offset Program. If you receive a notice about your wages, you have 30 days to act before garnishments begin. Take action NOW to protect your income and find a repayment solution that fits your budget.
The most important aspect to understand is that doing nothing is not an option. The sooner you investigate your loan status, the less impact you will experience. College Now offers free, one-on-one help to look at your specific situation and find the best options for you. Our experts can help you fill out the paperwork and make a plan that works for your future. Schedule an appointment today at cngc.org/appointment.