Nearly 2 million student-loan borrowers are in danger of having their wages garnished this summer by the federal government, according to The Wall Street Journal.
Citing data from the TransUnion credit-reporting bureau, the outlet reported on Tuesday that about 6 million federal student-loan borrowers are 90 days or more past due on their payments after the end of a pandemic-era forbearance. Of those, about one-third, or nearly 2 million borrowers, could default on their loans in July and have a portion of their paychecks automatically withheld.
That’s a sharp uptick from the credit agency’s earlier May projection of 1.2 million in default by next month.
Borrowers enter default status when they are 270 days past their payment’s due date.
Joshua Turnbull, head of consumer lending at TransUnion, told the Journal that some borrowers may be having a hard time getting in touch with their student-loan servicers, while others might be experiencing financial strain.
The Department of Education restarted collections activities in May — something it hasn’t done since before the COVID-19 pandemic. Officials notified borrowers that their tax refunds and federal benefits could be reduced or withheld beginning in June if they did not resume making payments.
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Author: Faith Novak
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