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Yahoo
3 days ago
- Business
- Yahoo
Is your Social Security check smaller this month? Here's what it might be, and what to do
If you receive Social Security, Supplemental Security Income (SSI) or both, and you have outstanding student loan debts you haven't been paying, your June check — and potentially future checks — may be smaller. In May, the U.S. Department of Education announced that it would begin 'involuntary collections efforts' against an estimated 5.3 million people who have defaulted on their federal student loans. Previously the government put repayments on pause at the start of the COVID-19 pandemic in 2020, but that has ended, as have some of former President Biden's repayment options and loan forgiveness initiatives. Notices sent out by the Education Department urged borrowers in default to contact their default resolution group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. To cover the debt owed, those who have not done one of those will see their wages garnished and tax refunds confiscated. And their Social Security benefits reduced. Of the 5.3 million borrowers, an estimated 425,000 are 62 years old or older, according to the Consumer Financial Protection Bureau. Here's what you can do. Social Security benefits have special protections against garnishment, with limits on how much can be garnished by the Treasury Offset Program. Money cannot be taken for medical debts, bankruptcy or civil lawsuits. But it can be garnished, with different limits, to repay child support, alimony or restitution, and debts owed to the federal government, such as student loans. The most that can be taken for federal debts, such as student loans. is 15%, which is not insignificant for people living on a fixed income. Currently, $750 per month of Social Security income is protected from garnishment, which can put recipients under the poverty line. You should have received notice from the Education Department by now if you're in default, and U.S. Secretary of Education Linda McMahon has urged all colleges and universities that receive federal funding assistance to reach out to all former students by June 30 to remind them of their obligation to repay any federal student loan that is not in deferment or forbearance. To be in default, you would need to have 270 days (roughly nine months) of nonpayment for most federal student loan servicers. Check the terms of your specific student loans. After 360 days, loans are transferred to the Department of Education's default collections program. You can also login to a page on the site to see whether your loans are in default Check to see your status, who your servicer is, and the terms of your loan. If you received notice from the Department of Education, read it carefully to see what your options are. Generally speaking, you can: Apply for income-based repayment plans that can lower your monthly payments to make them more affordable Rehabilitate defaulted loans by making nine out of 10 consecutive, on-time, full, voluntary, reasonable and affordable payments Consolidate your loans as part of a loan rehabilitation agreement Continue letting the government garnish your income, which can affect uyour credit rating Pay the debt in full The Education Department notes that depending on a borrower's income, payments under a loan rehabilitation agreement could be low as $5 a month. The Education Department said it will offer support to assist borrowers in selecting the best repayment plan, including a new Loan Simulator, AI Assistant called Aidan, and extended servicers call times. An enhanced Income-Driven Repayment process will simplify the time that it will take borrowers to enroll, according to the Education Department, and eliminate the need for borrowers to recertify their income every year. Keep in mind that under the Trump administration, the staff at the Education Department has been cut nearly in half, so it may be more difficult to reach someone there for help. You may have to make repeat calls to get through. Social Security in Florida: How dependent is Florida on Social Security? Study ranks state, how much people make Supplemental Security Income is a benefit payment for those with limited income or resources aged 65 or older, who are blind, or have a qualifying disability. Children with a qualifying disability can also get SSI, according to the SSA's website. Adults who earn more than $2,019 from work monthly typically do not qualify for SSI. As of April 2025, 543,098 Floridians received SSI payments according to data from the Social Security Administration. Of those, 241,868 were 65 years old or older and 382,925 were visually impaired or disabled. Florida had more than 5 million people claiming Social Security benefits as of December 2023, according to the AARP. That included more than 3.9 million retirees, over 478,000 disabled workers, more than 401,000 spouses or survivors and nearly 240,000 children. Nearly one in five Florida retirees, family members, veterans and others receive Social Security benefits, according to the AARP. This article originally appeared on Naples Daily News: Student loans default may mean a smaller Social Security check
Yahoo
19-05-2025
- Business
- Yahoo
On the Record: How to prevent wage garnishment for defaulted student loans
PEORIA, Ill. (WMBD) — Student loan payments are officially back after the extended pandemic pause, but this time, missing a payment could cost you more than just accumulating interest. A new federal policy allows the government to subject borrowers in default to wage garnishment, sparking concern among students and recent graduates across the country, including here in Central Illinois. 'It's definitely raising concern, especially among students who are juggling jobs and bills. But the good news is you can take action now to avoid it,' said Jon Neidy, vice president of student success at Illinois Central College. Wage garnishment is when money is taken from someone's paycheck, often by court order, to pay off debts like child support, taxes, and now, student loans. According to the U.S. Department of Education, 5.3 million borrowers are in default. Only 38% of borrowers are in repayment and current on their student loans. 'Community college students are often balancing school work and family responsibilities with a policy like this. If borrowers don't have the right information, it could really hit them the hardest. That's why access to clear guidance and affordable repayment plans is critical,' he said. At ICC, Neidy said they prioritize helping students avoid loan default. This year, ICC added a financial aid navigator, who helps students identify ways to pay for college, with loans typically being the last option. 'We help students understand borrowing before they ever take out a loan. And we follow up regularly through their time with us. We have a strong financial team committed to students and their success,' he said. Students are encouraged to regularly check their loan status at and take advantage of the guidance provided to avoid falling into default. 'If you're in default, don't panic. Contact the default resolution group or get into an income-driven repayment plan,' said Neidy. 'The worst thing you can do is ignore it. Help is available and taking that first step can protect you and your paycheck in the future.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Time of India
15-05-2025
- Business
- Time of India
Millions face student loan debt collection in US: Know how to avoid garnished wages
Millions of borrowers of student loans in the United States, who could not pay their bills, now face debt collection for the first time since 2020. As per the latest calculations by the New York Fed Consumer Credit Panel as well as credit bureau Equifax, almost one out of four borrowers, who have payments due, remained behind on loans in the three months till March this year, Financial Times reported. Student loan debt collection restarts The US President Donald Trump-led administration has again started the involuntary collections for federal student loan defaulters. The US government has even announced plans to garnish wages for these borrowers, besides confiscating tax refunds along with the social security benefits. It noted that this will start from "later this summer". 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Most Gorgeous Female Athletes Ranked. But Did We Get It Right? Click Here Undo At first, all of the 5.3 million defaulted borrowers will be sent 30 days notice. Post that, they will receive garnished wages to cover the unpaid debt, USA Today reported. In the US, student loan borrowers did not face loan collection threat since the onset of the COVID-19 pandemic in 2020. Live Events The US Department of Treasury has now sent 30-day official notice to nearly 195,000 of such borrowers, who failed to pay their student loan amount for at least nine months. Issued earlier this month, the notice informs them about the cut in their federal benefits in early June. How to avoid garnished wages, refund seizures? The best possible way for borrowers is to get in touch with the default resolution group of the US Education Department in order to make their monthly payment. This will help them in enrolling for the income-driven repayment plan or even the loan rehabilitation. However, a major challenge here is said to be the Trump administration's earlier decision to cut its staff by half. Mike Pierce of Student Borrower Protection Center told USA Today that borrowers face a "very hard time" as their calls are getting "dropped" or "bounced around," besides asking them to "hold for hours". When do student loans fall into default? These enter default only after the 270 days of nonpayment period. But it gets transferred to the default collections program of the Education Department after 360 days. suggests that more than 360 days delinquent means that such loans are already in default. Once in default, servicers usually go ahead with the wage garnishment process. It must be noted that the department is not required to take any legal action before it starts collecting a portion of paycheck. FAQs How many student loan borrowers are in default? The Education Department said that around four million of these are in late-stage delinquency (91-180 days). This means, roughly 10 million could end up being in default in "few months" time. How much can the govt garnish to cover student loan debt? Higher education expert Mark Kantrowitz suggests the federal government can garnish up to 15% of the borrower's disposable income to pay back the defaulted loans.
Int'l Business Times
06-05-2025
- Business
- Int'l Business Times
Education Department Urges Colleges to Aid Student Loan Borrowers as Collections Resume
WASHINGTON — The U.S. Education Department issued a "Dear Colleague Letter" to colleges and universities Monday, reinforcing their role in supporting student loan borrowers under Title IV of the Higher Education Act of 1965. The guidance, released as involuntary collections on federal student loans resume after a pandemic-era pause, underscores institutions' responsibility to help graduates manage repayment amid rising college costs. The department emphasized that while borrowers are primarily responsible for repaying loans, colleges play a key role in improving repayment outcomes. Institutions are urged to ensure former students understand their obligations and can access accounts for resources. The department will publish nonrepayment rates by institution on the Federal Aid Data Center later this month, using College Scorecard data to promote accountability. "As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students," said Education Secretary Linda McMahon. "For too long, insufficient transparency and accountability structures have allowed U.S. universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market." Under the Higher Education Act, colleges with high cohort default rates risk losing eligibility for federal aid, including Pell Grants and loans. The department called for proactive outreach to delinquent or defaulted borrowers before June 30, 2025, to address loans not in deferment or forbearance. The resumption of involuntary collections affects approximately 195,000 defaulted borrowers, who will receive 30-day notices from the Treasury Department starting Monday. These notices indicate federal benefits, including June checks, will be subject to the Treasury Offset Program. By summer, all 5.3 million defaulted borrowers will face administrative wage garnishment. The Federal Student Aid office is bolstering support with extended call center hours and increased capacity to guide borrowers toward income-driven repayment plans, loan rehabilitation, or affordable payments. Resources are available at Guaranty agencies are also authorized to resume collections on Federal Family Education Loan Program loans, with all actions adhering to legal requirements for notice and repayment opportunities. The department's guidance reflects a broader push for transparency in higher education, leveraging repayment data to ensure colleges prioritize student success and financial literacy. Institutions' engagement with borrowers will be critical to maintaining federal funding eligibility. Originally published on University Herald
Yahoo
05-05-2025
- Business
- Yahoo
2 Things You Must Do Now If You've Defaulted on Your Student Loans
Borrowers who haven't made any payments on their student loans for roughly nine months — 270 days — are in default status. At any given time, an average of 8.15% of borrowers are in default and 10.3% of borrowers default within the first three years of repayment, according to Education Data Initiative. Trending Now: For You: Defaulting on your student loans not only makes you ineligible for further federal student aid until you resolve the default but it also can result in garnished wages, loss of tax refunds or Social Security checks and negative credit reporting, according to Consumer Finance. The good news is that options are available to help. Here's what you should do now if you've seriously neglected your student loan payments. If you haven't made student loan payments in months and are unsure if you're in default, you can check. 'Borrowers can check their loan status by logging in to where they can verify loan status and obtain servicer information,' said Stacey MacPhetres, student loan expert and senior director of education finance for EdAssist by Bright Horizons. 'Additionally, upon login in, defaulted borrowers will see an urgent message regarding their account statuses.' Try This: If you confirm that your loans are in default status or have received written notice that they are, you should contact your student loan holder — the entity that owns your loan, such as the U.S. Department of Education — to find out what to do next. If you're unsure of the holder, log in to your student loan account to find the information. Here's a look at the different options available to get your loans back on track. While immediately paying off thousands of dollars in student loans isn't practical for the majority of borrowers who have defaulted, it is an option to quickly solve the problem. Another option is to rehabilitate your loans. Contact your loan holder to begin the process. According to a rehabilitation is only available once during the life of your loans. The steps depend on the type of student loans you have. If you have Direct or FFEL loans, you will sign a written agreement promising to make nine monthly payments within 20 days of the due date and make all required payments within 10 consecutive months. Payments, which are determined by your loan holder, will be reasonable and affordable and could be as low as $5 depending on your income. 'Completion of the rehabilitation plan will then take the loan out of default, remove it from the credit report and allow the borrower to resume repayment,' MacPhetres said. A final option to get out of default is to consolidate your loan(s) into a new Direct Consolidation Loan. This pays off your defaulted loans and replaces it with a new one. However, when you consolidate, any unpaid interest is added to your principal balance, which means you'll end up paying interest on a higher amount and could end up paying more over time than other options. To qualify, you'll need to either agree to repay the new loan under an income-driven repayment plan or make three consecutive, on-time payments on the defaulted loan before applying to consolidate. If you take the three-payment option, your loan holder will determine reasonable and affordable monthly payments based on your income. Unlike loan rehabilitation, however, loan consolidation won't remove the default from your credit history, according to More From GOBankingRates 5 Types of Vehicles Retirees Should Stay Away From Buying How Far $750K Plus Social Security Goes in Retirement in Every US Region 4 Things You Should Do if You Want To Retire Early 12 SUVs With the Most Reliable Engines Sources Stacey MacPhetres, EdAssist by Bright Horizons. This article originally appeared on 2 Things You Must Do Now If You've Defaulted on Your Student Loans Sign in to access your portfolio
