The U.S. Department of Education has restarted collections on federally-backed student loans in default, impacting over 5 million borrowers. Low-income individuals are particularly affected, facing immediate payment demands and potential wage garnishment. Legal experts, like Aisha Baruni, anticipate a rise in clients needing help navigating the complex student loan system. Advocates caution that restarting collections could lead to increased financial strain for borrowers who have not made payments in over 270 days, pushing them into a more punitive loan system.
When a federal student loan goes into default, the full balance becomes immediately due, and the government can garnish wages and seize federal payments to collect what's owed.
Restarting collections may push low-income borrowers into a confusing, punitive loan system that could deepen their financial hardship.
Dealing with the bureaucratic federal student loan system is anything but simple, especially for those in default - borrowers who have not made a minimum loan payment in 270 days.
Aisha Baruni, an attorney at Legal Services NYC, is preparing for an influx of clients concerned about navigating the complex student loan system as collections restart.
Collection
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