Federal Student Loan Delinquencies at Record High as Collections Resume
1 in 5 federal student loan borrowers seriously delinquent as collection resumes following COVID-19 payment pause. Delinquencies could lead to severe financial consequences.
Education Department resumes collecting loans for borrowers in default
Washington Examiner
Overview
A recent TransUnion analysis reveals that 20.5% of federal student loan borrowers are seriously delinquent, marking a significant increase since the pandemic. The Department of Education has resumed collections after a five-year pause due to COVID-19, warning borrowers could face wage garnishments, penalties, and declines in credit scores. Secretary of Education Linda McMahon emphasized that taxpayers should not bear the financial burden of unpaid loans. With millions potentially affected, experts urge borrowers to seek repayment options, as delinquencies may worsen the financial outlook for many.
Content generated by AI—learn more or report issue.
Get both sides in 5 minutes with our daily newsletter.
Analysis
- The resumption of federal student loan collections poses significant financial challenges for millions of borrowers, with one in five now classified as 'seriously delinquent' as payments restart after an extended pause during the pandemic.
- The surge in delinquencies highlights the struggles faced by borrowers, many of whom may be unaware of their obligations or unable to make payments due to financial strain; this could have serious repercussions on their credit scores and future borrowing capabilities.
- The complexity of the student loan default situation underscores the varying reasons for delinquency, necessitating a more nuanced response to assist borrowers in managing their financial burdens.
Articles (6)
Center (2)
No highlight available for this article.
CBS News·2M·No highlight available for this article.
USA TODAY·2M·FAQ
No FAQs available for this story.
History
- This story does not have any previous versions.