The Teacher’s Perspective

Tyler Eytchison, a fifth-grade teacher at San Marcos Elementary School, is preparing his students for their final exams as the school year nears its end.

While he anticipates the bittersweet goodbyes, he also looks forward to being one year closer to paying off his student loan, a debt he has been managing for the past 12 years.

middle school is right around the corner,and saying goodbye is always the toughest thing.

Eytchison’s experience highlights the challenges many face with student loan debt, especially in the early stages of their careers.

Collections Restart After Pandemic Pause

Starting this week, the Education department is resuming collections on defaulted federal student loans, a process that was paused in 2020 due to the pandemic [[3]].

This resumption affects an estimated 5 million borrowers who have not made a monthly payment in over 360 days [[3]].

The U.S. Department of Education made the declaration about two weeks ago.

The Reality of Default

Eytchison described his loan repayment journey as a rollercoaster process, including a period of default in the early years.

He empathizes with borrowers facing similar situations, noting how easily default can occur:

Because as students first starting off on your career or trying to find your career, we don’t have a rainy day fund that, if something goes wrong, we could fall back on. in my case, my car broke down.

Federal Student Aid defines defaulted student loans as starting with delinquency [[1]].

Loans become past due or delinquent the first day after a missed payment [[1]].

Potential Consequences of Default

Celina Damian, student loan servicing ombudsperson with the California Department of Financial Protection and Innovation, warns of the serious repercussions of ignoring defaulted loans.

The danger with this is that many borrowers thought they had the loan forgiven or they just forgot about it, and with everything going on right now with people financially struggling, it’s also coming at a bad time.
Celina Damian, student loan servicing ombudsperson with the california Department of Financial Protection and Innovation

The Department of Education can take several actions against borrowers in default, including:

• Seizing tax refunds.
• Imposing wage garnishments.
• Deducting up to 15% of Social Security payments.

Damian emphasizes that lack of awareness is not an acceptable excuse:

They can do that whether or not you say, ‘I didn’t receive an email. I didn’t know.’ For a federal wage garnishment, that is not an excuse.

Options for Borrowers in Default

If you are in default, suspect you might be, or are unsure of your loan status, take these steps:

1. Visit studentaid.gov to check your loan status.
2. If in default, contact the Department of Education Default Resolution Group and explore these options:
   • Start making payments.
   • Sign up for loan rehabilitation.
   • Enroll in an income-driven repayment plan.

The Department of Education reports that approximately 4 million borrowers are also about three months away from defaulting.

Being proactive is crucial, especially if you have experienced changes in your name or address since your last loan activity.

FAQ: Student Loan Default

What is a student loan default?

Failure to repay a student loan according to the terms agreed upon, typically after being delinquent for an extended period.

What are the consequences of defaulting on a student loan?

Wage garnishment, tax refund offset, Social Security payment deduction, and a negative impact on your credit score.

How can I get out of student loan default?

Options include loan rehabilitation, consolidation, or entering into an income-driven repayment plan.

Where can I find more facts about my student loan status?

Visit studentaid.gov for detailed information about your federal student loans.