The U.S. Education Department plans to resume collecting on defaulted student loans starting May 5, 2024, after pausing since spring 2020. This includes withholding tax refunds and Social Security benefits from defaulted borrowers. About 38% of student loan borrowers are current on payments, while many are at risk of defaulting. Consumer advocates criticize upcoming wage garnishments. Research indicates borrowers often default due to prioritizing other debts or lack of income, with unemployed borrowers being twice as likely to default.
"The folks who fall behind on their payments are those who are least well served by the higher education and repayment systems... These aren't people who overwhelmingly do not want to pay their loans."
"When the Biden administration restarted student loan payments in September 2023, it offered a one-year grace period for borrowers during which those who didn't make payments were spared the worst financial consequences."
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