Mississippi currently has 72,000 defaulted federal student loan borrowers, according to the U.S. Department of Education. A loan is considered delinquent after one missed payment, but in default once no payments have been made 270 days past the last due date.
“It is critical that borrowers reach out to their student loan servicers,” said Apryll Washington, the deputy director of the Mississippi Office of Student Financial Aid. “Number one, make sure that they have updated contact information. So they can receive those communications, right?”
Defaulted Mississippi borrowers currently owe nearly $1.5 billion dollars in federal student loans.
“During a large portion of time, borrowers were subject to what's called the COVID-19 payment pause where payments were suspended,” said Washington. “But, of course, that's all behind us now. Every borrower, they are in repayment unless they have been granted deferment or forbearance.”
Washington says it's important that borrowers understand how much they owe in order to avoid the repercussions of wage garnishment, tax refund seizures and hits to one’s credit score.
“Auto loans, different things that you're trying to go and borrow money for, small business loans, all of those things can be impacted if you fall behind on your student loan payment,” said Washington.
Borrowers can also lose rights after defaulting, including being able to enter into deferment or hardship forbearance.
Notices of wage garnishment from the government include options for potential remedies, including requests for hearings or loan rehab. The government is required to give borrowers 30 days notice before taking actions against wages.
“What was recently released by the department, they stated that they're not just throwing everyone into wage garnishment all at one time,” said Washington. “They're going to be making a slow approach to actually sending out notices to those borrowers. So, that's why I always say time is of the essence. Please, please reach out to your student loan servicer. Or the Department's default resolution group if you believe that you're in default because sometimes you may have a very small window to see if you can do something.”
Borrowers remaining in default after receiving a notice may have up to 15% of their salary seized.
