On the Record: How to prevent wage garnishment for defaulted student loans
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 StudentAid.gov 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.'
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