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What does the restart of student loan collections mean for borrowers?
The restart of student loan collections means that borrowers who have defaulted on their loans will now face consequences such as wage garnishments and withheld tax refunds. This marks the end of a relief period that began in March 2020 due to the COVID-19 pandemic, and it emphasizes the need for borrowers to resume their repayment obligations.
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How many borrowers are affected by the end of the pandemic pause?
Approximately 5.3 million borrowers are affected by the resumption of student loan collections. This includes individuals who have defaulted on their loans and are now subject to involuntary collections through programs like the Treasury Offset Program.
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What are the consequences of defaulting on student loans now?
Defaulting on student loans can lead to severe consequences, including wage garnishment, tax refund withholding, and damage to credit scores. The Department of Education is enforcing these measures to ensure accountability in higher education financing, which can significantly impact borrowers' financial stability.
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What steps can borrowers take to manage their loans effectively?
Borrowers can manage their loans effectively by staying informed about their repayment options, considering income-driven repayment plans, and communicating with their loan servicers. It's crucial to create a budget that accommodates loan payments and to seek assistance if facing financial difficulties.
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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 reach out to their loan servicer immediately to discuss options such as deferment, forbearance, or income-driven repayment plans. Taking proactive steps can help prevent default and its associated consequences.
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How can borrowers stay updated on their loan status?
Borrowers can stay updated on their loan status by regularly checking their account on the Federal Student Aid website, signing up for alerts from their loan servicer, and following news from the U.S. Department of Education regarding any changes in policies or repayment options.