Individuals who are in default on their student loans could see their wages garnished by the federal government, a significant penalty that also extends to the potential seizure of tax refunds. This situation has prompted consumer adviser Clark Howard to outline ways borrowers can avoid these consequences.
Under new federal regulations, the government is empowered to garnish wages and seize tax refunds from those who are delinquent on student loans. Howard, a consumer adviser, highlights that there is a way for borrowers to rectify their status with the Department of Education, potentially preventing the government from taking their paychecks.
Howard explained the seriousness of student loan defaults, noting that those who haven’t made payments in a while should be concerned. “If you or somebody who’s been delinquent on your student loans, you can come out of the cold and there’s a process with the Department of Education where you can go current on your student loans even if you’ve been delinquent and then they’re not going to come in and grab from your paycheck,” Howard said.
Becoming current on student loans involves working with the federal government to establish a payment schedule that must be adhered to. If borrowers keep to their agreed payment plan, they can avoid garnishment and protect their tax refunds.
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