Department of Education to resume loan payback for borrowers
ST. JOSEPH, Mo. (News-Press NOW) — The U.S Department of Education will officially resume collecting defaulted federal student loans on Monday, May 5, marking the end of a three-year pause, which began during the COVID-19 pandemic.
For thousands of Missourians, and particularly residents of St. Joseph, this could mean renewed pressure from loan services, especially for those whose loans are currently in default.
However, for St. Joseph resident Lorna Davis, the deadline will be of no concern as she believes its starts with making smart decision before taking loans.
It's a matter of catching it beforehand and deciding if you want to go to a four year school and if you're actually going to stick with it," Davis said. "If there is any way to avoid them, I think that's best."
The pause, which began in March 2020, offered temporary relief to more than 40 million borrowers, halting interest accrual and collections on defaulted loans. But starting this month, collections on federally held student loans in default are restarting, with garnishments of wages, tax refunds and Social Security benefits once again on the table.
In an April interview with Fox Business, Secretary of Education Linda McMahon urged Americans to act swiftly. 'It's very simple, we've announced that by May 5, you must start to repay your loan,' McMahon said. 'This is not meant to cause hardship. There are several different payment plans available.'
What This Means for St. Joseph Residents
According to the most recent data from the Department of Education, Buchanan County has a significant number of residents with student debt, and many of those loans are currently in default. Local borrowers who have fallen behind could now face renewed garnishments or negative credit reporting if they do not act quickly.
For St. Joseph resident Beth Crumpler, the return to repayment is daunting. "Right now I haven't been navigating them because I haven't had to pay with the forbearance going on,'Crumpler said. "But I'm just going to have to work probably until the day I die. I'll just be working to pay what I have to pay."
The Fresh Start initiative, a temporary program from the Department of Education, allows borrowers in default to return to good standing and avoid collections. Borrowers can:
Remove the default status from their loans, re-enter regular repayment plans, restore eligibility for federal financial aid, and prevent wage or benefit garnishment.
Borrowers must act soon, as Fresh Start is not automatic. To enroll, visit myeddebt.ed.gov or contact your loan servicer.
"I don't know if it was worth it to have the loans but college prepared me for my job absolutely, Crumpler said.
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