PAYCHECKS for millions of Americans will be slashed by 15% in just a few days as they fall behind on their payments.
Those who have not paid are at risk of severe federal punishment, and the number of people being effected is rising.
Paychecks for millions of Americans will be slashed by 15% in just a few days as they fall behind on their payments[/caption]
It comes as Donald Trump lifted a five-year pause on involuntary student loan collection following the pandemic[/caption]
Nearly two million students are at risk of having their wages slashed by 15% in an effort to recover late student loan repayments.
It comes as Donald Trump lifted a five-year pause on involuntary student loan collection following the pandemic.
This allows the government to resume a crackdown on unpaid loans, with roughly six million Americans newly falling into the delinquency category, per TransUnion.
Delinquency refers to payments that are 90 days or more past due.
It is thought that by August, an additional one million borrowers will be in default, which refers to being 270 days behind on payments.
In May, roughly 195,000 defaulted borrowers received official 30-day warning letters from the government hinting that their wages could be reduced.
An exact date was not given, but recipients were told to expect wage cuts from June.
Right now, the federal government is owed a staggering $1.69 trillion in student loan repayments.
As a result, students could see their wages docked by the government, tax refunds withheld and Social Security benefits reduced until the money is recouped.
It is important to note that delinquency doesn’t trigger things like wage cuts on its own, but can automatically lower your credit score.
Newly delinquent borrowers have reported an average 60 point drop on their credit score.
Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, said: “We continue to see more and more federal student loan borrowers being reported as the 90+ days delinquent, making a larger number of consumers vulnerable to entering default and the start of collections activities.”
GROWING PROBLEM
And the problem is only getting worse, as the amount of delinquent student loan borrowers has risen from 20% to 31% just from February to April of this year.
TransUnion has warned that this is the highest rate ever recorded.
WHEN SOCIAL SECURITY PAYMENTS ARE MADE
Social Security payments are issued on the second, third, or fourth Wednesday of each month based on the recipient’s birthdate:
- Second Wednesday: For individuals born between the 1st and 10th of the month
- Third Wednesday: For those born between the 11th and 20th
- Fourth Wednesday: For those born between the 21st and 31st
This is compared to February 2020, which saw about 12% of federal student loan borrowers fall into the delinquent category.
TransUnion also noted that only 03.% of students were in danger of falling into default in April, but now millions are at risk.
WHY IS THIS HAPPENING?
The increase can be down to many factors, including stagnating wages, greater borrowing rates, or the pressures of inflation.
If students are finding it harder due to a rise in the cost of living, they will find it more difficult to make all of their payments.
The federal government is legally permitted to garnish wages up to a 15% rate.
Those at risk have been urged to contact their loan servicers as soon as possible.
This should give you a chance to assess your options.
Nearly two million students are at risk of having their wages slashed by 15% in an effort to recover late student loan repayments[/caption]
The increase can be down to many factors, including stagnating wages, greater borrowing rates, or the pressures of inflation[/caption]
