MUW students prepares for federal student loan changes
COLUMBUS, Miss. (WCBI) – The Federal Student Loan Program has been through some changes in the past few years.
And another one is on the way.
The Trump Administration and the Department of Education announced this week that they will soon resume collections on defaulted student loans.
With college seniors getting close to graduation, this could mean a potential pivot in their financial future.
Nationwide, around 5 million borrowers are in default on their student loans
Now those who are affected are warning current college students to plan ahead to avoid some of the troubles.
The Department of Education announced, starting May 5, it will resume collections for federal student loan borrowers who have defaulted on their debt.
And they are threatening wage garnishments, withholding tax refunds, and possibly even Social Security benefits.
The decision is raising questions and concerns among current college students, especially those close to graduation.
“I really don’t know how to feel about it because a lot of people went through the process of getting them paid off,” Syniah L. Lester said. “Also, going through the process of loan forgiveness so what will happen to the people that got the loan forgiveness. Do they have to pay those loans back or what’s the case? So I thought it was pretty shocking.”
The change will affect more than five million borrowers who now have to find a way to get current on their payments.
That has some students planning ahead so debt won’t be an issue when they finish school.
“Right now for me I’m already trying to place money aside for that as well as whenever I do get my job, having to set aside money for that specific purpose,” Zachariah Harden said.
“I actually witness a lot of situations where people later on in life struggle to pay off those loans or just don’t want to pay off those loans,” Kira Kirk said. “In the future I want to be successful with my money so I just think that it’s important I think now about my future because that’s the best way to succeed in life.”
During the pandemic, there were extended pauses on payments for student loans and possible federal loan forgiveness.
Even with payments resuming as of late 2023, collections were on pause.
College students said it’s important to remain aware of changes, so they can avoid potential financial distress.
“It’s extremely important because it affects you in the future and definitely can affect like your credit score and a whole bunch of financial aspects of your life,” Harden said. “Finances are extremely important throughout our life.”
Best Colleges reports that Mississippi ranks third in highest student loan debt per person.
