PHOTO: Courtesy of WLUK
(WTAQ-WLUK) — Millions across the country, including in Wisconsin, are in default on their student loans.
The government is cracking down on federal loan repayment, with the Department of Education’s Office of Federal Student Aid resuming collections on federal student loans that have been in default.
“Budgets are very challenged right now, so when you add on the additional burden of paying back your student loan, then folks need to revisit their budgets. Perhaps [they’ll have to] make some adjustments so it doesn’t have an overly great effect on their lifestyle currently, and saving for retirement,” said Preston Cherry, a UW-Green Bay finance professor.
This comes as many campuses, like UW-Green Bay, wrap up the spring semester. For many graduating seniors, that means making payments on their student loans, if they haven’t already been paying as they went through school.
“I’m hoping to make decent money when working, but a payment plan is probably the idea of what I’m looking for,” said UW-Green Bay senior Baily Spach.
“The beginning of each year I’ve been trying to pay as much as I possibly can out of pocket. Not to exhaust the idea of loans. I don’t know, it’s a little stressful to think about,” said senior Kennedy Bruss.
Referrals for collection were put on hold in March 2020 due to the COVID-19 pandemic.
For most federal student loans, you default if you haven’t made a payment in more than 270 days.
The Department of Education says more than five million borrowers have not made a monthly payment in more than 360 days.
In 2018, 11% of Wisconsin borrowers were in default, according to the most recent research from UW-Madison’s Student Success Through Applied Research Lab.
Financial experts like Cherry say failing to make payments can come with heavy consequences.
“Taking action can avoid — particularly when you’re talking about collections — having your wages [garnished], your tax garnished and credit score affected,” said Cherry.
Comments