A recent study by TransUnion predicts that nearly two million Americans could face wage garnishment this summer due to defaulting on federal student loans. This is an increase from previous estimates and signals a significant shift in loan enforcement after a five-year hiatus caused by the pandemic. The Education Department's resumption of garnishments raises concerns for borrowers as the economy remains fragile, with further implications for credit scores and financial stability. Many borrowers, struggling with rising costs and misinformation regarding loan forgiveness, are now at risk of losing a portion of their incomes to debt collection efforts.
The Education Department warns that wage garnishment on loans in default will begin this summer after a five-year pause, affecting nearly 2 million people.
TransUnion forecasts that the number of Americans facing wage garnishment could increase dramatically, reaching a total of 2 million, contributing to further economic strain.
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