Student Loans: What You Need to Know About Wage Garnishment
Student Loans and Wage Garnishment Overview
Student loans can have significant impacts on borrowers, particularly when it comes to wage garnishment. After a five-year pause due to the COVID-19 pandemic, the Trump administration has now resumed collection on student debt, which could lead to serious financial repercussions for those who are behind on payments.
Impact on Borrowers
- 43 million borrowers owe over $1.6 trillion in student loans.
- 5 million are in default, meaning no payments have been made in over 360 days.
- An additional 4 million are significantly delinquent, with at least 91 days without payment.
The Department of Education anticipates that up to 10 million borrowers could default within the next few months.
Delinquency Rates and Age Demographics
Recent data showing a spike in delinquency rates from less than 1% to nearly 8% indicates troubling trends. Interestingly, older Americans, while making up 20% of borrowers, have disproportionate delinquencies at 33%.
Important Considerations
Unlike other debts, student loans have no statute of limitations on collections. This means that the government can pursue avenues of collection indefinitely, leading to wage garnishment and other punitive actions against those who default.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.