BURLINGTON, Vt. (WCAX) – The government, starting this month, is expected to begin clawing money from the paychecks of some borrowers who have defaulted on their student loans.
Twenty-nine-year-old Shawn Price graduated from a master’s program at the University of Vermont in May and now faces $36,000 in student loans.
“It’s looking at like $400 a month for however long, which is a bad financial burden on top of increased costs of living and not a good job market,” said Price, one of over 42 million Americans who owe money for their education. “It’s just like your standard everything you have to do, and then you just have this extra financial burden on top of it, which just makes things very difficult living, especially here in Burlington.”
Price has been able to keep on top of his monthly payments so far. But there are over 5 million Americans who have fallen behind. Anyone not in forbearance and is 270 days or more past due on their federal loans is about to see that reflected in their wages.
“It takes away wages that people need for rent, for groceries, for auto, and it causes havoc,” said Joshua Cohen, a student loan lawyer.
Cohen says if you find yourself in that position, there’s a way to get ahead. You can do a rehabilitation plan, which is an agreement that you will make nine payments, and then you will be out of default. You can also consolidate, but it does not stop garnishment while it’s still processing.
Cohen recommends a hybrid model. “Enter rehabilitation to stop garnishment from starting, and you can still consolidate while you’re in that rehabilitation. So, there’s a lot of different permutations, but the bottom line is you have methods to get out of default, and that’s what a lot of people need to understand — federal loans, you can get out of default,” Cohen said.
As Price faces down his several more years of payments, he’s hopeful there will eventually be another way. “The country should look at more options, at forgiving these loans or having different ways of repaying them, or putting off payments, until there’s like a certain income threshold, because you’re putting this burden on people right as they’re getting out of college,” he said.
The department will give borrowers a 30-day notice before their wages are garnished.
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