The American secretary for education Linda McMahon, at a meeting of the cabinet at the White House in Washington, DC.
Al Draco / Abaca via Reuters
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Al Draco / Abaca via Reuters
After a five -year interruption, the United States Ministry of Education said that it will start to resume default student loan collections on May 5.
Of the more than 42.7 million student loans in the United States, which owes 1.6 Billion of collective dollars, the ministry claims that more than 5 million have not made payment in the past year. This number should grow as 4 million additional borrowers tackle the default status.
“American taxpayers will no longer be forced to serve as a guarantee for irresponsible student loan policies,” said US Secretary for American Education Linda McMahon in a statement.
The ministry said that it would begin to inform borrowers who are in default by e-mail in the next two weeks, urging them to make a payment or register for a reimbursement plan, and to refer it to a government website providing information on how to do so.
Then, on May 5, the ministry will begin to refer the borrowers who remain in the absence of a collections program managed by the Treasury Department.
“It could not have happened at a worst time for millions of Americans,” said Aissa Canchola Bañez, director of Student Borrower Protection Center, a non -profit group that aims to reduce student debt. These borrowers, she added, “already find themselves navigating an economic uncertainty as incredible in recent months.”
It also underlines the fact that older borrowers tend to deal with the greatest difficulties in repaying their loans: almost 40% of federal borrowers over 65 years old were in default on their student loans, according to a 2017 report from the Consumer Financial Protection Bureau. “These are the elderly who are on fixed income,” she said.
When the borrowers are late, added Bañez, their credit ratings can take a hit, which makes more difficult the qualification of more credit and other loans for things like housing and other basic needs.
The Department of Education said in its opinion that, later this summer, it will start the salary garnish process – payments in terms of payment would automatically be deducted from borrowers’ pay checks.
