Student loan default collection resumes after 5 years

(CNN) - Millions of people who borrowed money for their education are at risk of having their benefits or wages garnished as the federal government resumes student loan collections.

The Trump administration is restarting collection of defaulted federal student loans Monday after a five-year pause related to the COVID-19 pandemic. It’s part of a broader effort to roll back loan forgiveness policies and dismantle the Department of Education.

Defaulting usually means missing payments for 270 days or more. The government says that can now lead to garnishment of state or federal benefits, and it will start garnishing wages this summer.

The Education Department estimates about 5 million borrowers have defaulted on student loans. It says another 4 million are at least 90 days late on payments.

Experts suggest all borrowers visit their loan provider’s website to confirm their status and update their contact information.

If a person is worried about defaulting, experts say they could look into an income-based repayment plan, payment pauses called deferment or forbearance or consolidation or refinancing.

The Education Department says a person with a defaulted loan can learn their options through the office of Federal Student Aid’s Default Resolution Group. They might be able to restore their status through a process called rehabilitation.

Experts say it’s also important to watch out for student loan-related scams.

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