Danielle Douglas-Gabriel, The Washington Post:
So, honestly, this was always the plan. When the Biden administration, before leaving office, they had ended a number of programs that had really kind of softened the return to repayment.
Now, if you recall, the student loans resumed back in 2023. Then the Biden administration gave borrowers an additional 12-month grace period, whereby, if you were to miss a payment or be late on a payment, it wouldn’t count against you. That was over in September 2024.
And I think now we’re starting to see the consequences of the end of that grace period. A lot of borrowers I have spoken with in the last couple of months have said that they weren’t even aware that student loans had fully gone back into repayment. And so many of them accidentally missed payments for several months. At least that’s what they’re saying to me.
And now we’re starting to see the consequences of that. I think around February, you were starting to hear about people whose credit scores guarded to drop because the department had to and student loan servicers that managed the loans had to report their late payments to the credit bureaus.
And so there are about four million people who are 90 days past due on their student loans. And so there’s a real fear right now that many of those people, if there isn’t an intervention and they don’t start making payments or find a plan that they could afford, they could go into full-blown default later this year.
And if that were to happen, and they’re past a full year of not making payments, well, that’s when you start to see things like the government garnishing your wages. That’s when they can start seizing your tax refund, seizing Social Security benefits. And certainly we don’t want to see that for any American, especially because the consequences are so severe.
And people are really worried about their economic status at this stage.
