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How many borrowers are affected by the restart of collections?
Approximately 5.3 million borrowers are affected by the resumption of student loan collections. This marks a critical moment as many individuals who have been in a state of relief since March 2020 must now navigate their repayment options.
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What options do borrowers have to manage their loans now?
Borrowers have several options to manage their loans, including enrolling in income-driven repayment plans, seeking deferment or forbearance, and exploring loan forgiveness programs. It's essential for borrowers to communicate with their loan servicers to understand the best course of action for their financial situation.
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What are the potential consequences of non-compliance?
Non-compliance with student loan repayment can lead to severe consequences, including wage garnishments and the withholding of federal benefits such as tax refunds. Borrowers should take proactive steps to avoid these penalties by staying informed and seeking assistance if needed.
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What led to the resumption of student loan collections?
The resumption of student loan collections follows a prolonged pause that began in March 2020 due to the COVID-19 pandemic. The Biden administration extended this relief multiple times, but the final grace period ended in October 2024, prompting the current restart of collections.
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What should borrowers do if they can't afford their payments?
If borrowers find themselves unable to afford their payments, they should immediately contact their loan servicer to discuss options such as income-driven repayment plans or deferment. It's crucial to act quickly to prevent default and its associated consequences.
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What are the implications of this change for the future of student loans?
The resumption of collections signals a shift in government policy regarding student loans, emphasizing the need for borrowers to be proactive in managing their debts. With nearly 25% of the $1.6 trillion student loan portfolio potentially in default, this situation could lead to broader implications for both borrowers and the government.