Federal student loan collections to resume May 5. How Charlotte college students are preparing:
The process resumes on Monday, May 5.
Finals are days away at UNC Charlotte – and so are collections on defaulted federal student loans.
Current students get a six-month grace period, but some said they already have a plan to keep good credit like finance student Tanner Freeze.
'I have auto payment plans set up on all of my student loans and all of my anything that I have to pay, like my car loan, just to make sure that I avoid any of those potential issues in the future,' Freeze said. 'I just want to really kind of focus in and try to pay down as much as I can the first few years when I'm out of school to try to bring down as much of the principal as I can upfront so that I pay less over time.'
Grad student Vanessa Jones studying kinesiology said she is getting ahead on paying back loans while she can.
'Paying back loans, I don't know, this is very scary,' Jones said. 'It's adulting, but it's scary.'
Sarah Austin is a policy analyst for the National Association of Student Financial Aid Administrators (NASFAA).
'Defaulted student loan borrowers may now be subject to having federal payments such as better tax refunds or Social Security benefits, other federal payments – those will now potentially be withheld and applied to their defaulted student loans,' Austin said.
The U.S. Department of Education said more than five million borrowers have not made a monthly payment in over 360 days and sit in default.
Justin Howard is studying public health and said even though he is not directly impacted, his friend is.
'My friend, he's been kind of a little stressed out about it,' Howard said. 'It's really been something that's bothering him, but I've been doing my best to kind of support him and try to help him apply for scholarships and things like that.'
Austin said you could be in default and might not know it – so be on the lookout for an email from the Department of Education. They should be sent out before May 5.
'There's so many borrowers that have never been in a normal repayment landscape. If they've entered repayment at any time in the last five years, they don't really know what the normal process is,' Austin said. 'I think it's quite reasonable to assume there are some defaulted student loan borrowers who may not even know they are in default until they miss maybe one of these payments or have their wages garnished.'
Austin said this could impact your paycheck later this summer.
Each individual situation can be different. To find out what could be withheld from you, visit Studentaid.gov.
NASFAA also has a toolkit to help you determine what to do when entering repayment for student loans.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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