The U.S. Department of Education announced the restart of involuntary collections on student loans, including wage garnishments, beginning as early as May 5. This decision comes after a five-year pause in collection activity, with the Biden administration focusing on providing relief to struggling borrowers during the Covid pandemic. The outstanding federal education debt exceeds $1.6 trillion, with millions of Americans holding these loans. Borrowers may have questions about the upcoming collection activity, such as what payments can be garnished and how much money can be taken. Federal debts can lead to garnishments of federal tax refunds, wages, and Social Security benefits, among other assets. Borrowers facing collection activity should take steps to get out of default, enroll in income-driven repayment plans, or apply for deferments or forbearance to avoid garnishments. If garnishments do occur, the government must provide notice before initiating collection activity. Borrowers have the option to challenge wage garnishments or offsets to Social Security benefits if it will cause financial hardship. It is advised to contact the Education Department for more information on disputing offsets and seeking financial relief.
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