BUFFALO, N.Y. (WKBW) — The Department of Education will resume collections on federal student loans in default starting May 5.
Of the 42.7 million borrowers who owe more than $1.6 trillion in student debt, more than five million borrowers are in default, according to the U.S. Department of Education.
Many of those borrowers have not made a payment in nearly five years due to a pandemic-era pause. The agency said if payments are not made, it is prepared to take "involuntary collections", including wage garnishment, where employers are ordered to withhold part of a paycheck to repay the debt.
Damien Boyd is among 42 million Americans with federal student loan debt. The third-grade teacher has been on a repayment plan since 2017.
"I'm currently a little over $98,000," Boyd said. "Right now, I'm on an income-based repayment plan. I'm doing the best that I can. It's drops in a massive ocean. It hurts."
Boyd, who earned his bachelor's from the University at Buffalo in 2013 and his master's from Buffalo State University in 2021, has worked two jobs over the past three years. However, he said the cost of higher education has left him in financial turmoil.
"I just have this real issue with trying to understand how you're incentivizing us to go to school to get degrees so that we can enter the workforce to be successful but we're not making wages that make these loans feasible, so we end up going into default, and your resort is that we are going to have to pay anyway," Boyd explained.
The Education Department, under Secretary Linda McMahon, said about 1.8 million borrowers will be moved into repayment plans. Those who miss payments could see credit scores drop or wages garnished.
Joelle Leclaire, Chair of the Economics and Finance Department at Buffalo State, said it is time for borrowers to revisit their budgets.
"If you had been overspending, relative to that payment you were eventually expected to make, then you're going to have to make plans to not be spending as much and set some money aside to be in that repayment," Leclaire said.
Borrowers in default will receive emails in the coming weeks.
- Encouraged to contact the government's Default Resolution Group to either make a payment
- Enroll in an income-driven repayment plan -or-
- Sign up for loan rehabilitation
Leclaire said the department is making efforts to help, but she believes there is a better way to go about this process.
"I don't think we should have student loans. I think it's getting to be ridiculous. I think we should just do away with the whole process," she explained. We're paying debt collectors, we're paying to get the debt out to the students. People are calling to work out payment plans. Just pay for the debt directly. It only affects less than 10% of the population in the U.S. I think it's completely inefficient."
Additionally, Boyd said he does not want student loan debt to deter prospective students from getting higher education.
"I do still want to empower people to go to school. I do want them to seek out their own invested interest. It's disheartening that the government doesn't have your back. Again, I thought that was their job but we should continue to chip away and believe in each other," Boyd said.
