Collections begin on student loans in default | FOX 10 Phoenix

Sure. Correct. Absolutely. So what's the best way that these individuals, if they have these student loans, can check to see where they are with this whole process? Absolutely. I mean, it's just the last five years have just been played with so much confusion in the student loan space. And so best place to really look is just the StudentAid.gov site. So that's the government site, not their loan servicer, who's the middleman, but the actual Department of Ed site. That's gonna be the best place to check to see what is your actual status, because there's so many repayment plans that you might actually be paying zero dollars right now and not actually be in default. So it's important to know, are you actually in default or not? You know, I was looking at some stats here, and I thought this was pretty interesting. According to the Education Department, only a third of the nearly 43 million borrowers are making consistent payments and about five million are either in default or delinquent. So when we talk about that difference between default and delinquent, we kind of jump those together. But there is a big difference between the two. Yeah. You know, I think it's there's a lot of these income driven repayment plans that people might actually be paying zero dollars on their loans anyways. Right. And so being default is just when you're expected to make a payment and you're not making a payment. That's the big difference. But with so much of the things getting extended and pushed out, a lot of people are frankly confused about, you know, are they actually delinquent or in default on their loans or not? And so that's the we really got to zoom in and check in. If you haven't logged into that student aid site in a while, it's time to do so. It's time to do that. Let's talk about this. So loan holders who are delinquent for 270 days, they could potentially be sent to collections, right? Absolutely. So they can actually garnish up to 15 percent of your wages. And there's actual federal treasury offset, too. So if you owe the government owes you any money or even some of your tax refund money, they can actually get access to that and take that. So it's your wages, too. So that can go up to 15 percent. Yeah. So it's absolutely. So it's important to know what are the ways that you can get out of that. So let's talk about this, because this has been, you know, some of these individuals haven't had to pay for, what, five years since March 2020. What are some ways that maybe some of these individuals should be thinking about ways to repay this? Absolutely. So, I mean, really, if you're in default status, there's only three ways to get out of that. Right. And so the first is probably the most preferential called the loan rehabilitation program. So this is something that you can actually get enrolled in. You got to you reach out to your loan servicer and they will walk you through developing what is kind of a normal and an agreeable payment that you made for the nine out of the next 10 subsequent months. And so to interrupt you real quick, is this like a government agency or is this would be like with some sort of financial institution? This is within the Department of Education. They offer this. And then if you go through that rehabilitation process, they actually will clean your credit score from that default as well. So it's really important that we do that. But other options are looking at a consolidation within the Department of Ed or just paying in full. But it's important with this consolidation and the rehabilitation. It's a one shot, one shot at it. And then if you do it, you can't do it again. So it's really important. All right, Michael, you mentioned something I thought was really important. You said that, unfortunately, in situations like this, we've got scammers kind of coming out of the woodwork. We got about a minute left. Can you kind of walk us through what we should be on the lookout for? Yeah, absolutely. I mean, anytime there's opportunities where there's a lot of mass confusion and fear and this is a really fear inducing topic of student loans. A lot of people don't even know who they're reaching out to. They have the Department of Ed. They have their student loan servicer. There's multiple parties reaching out to them. But it's really important that you're not you're actually working with a government agency when you're talking with this. And if you're getting phone calls and other things like that, have your guard up, you know, really making sure that you're not getting taken advantage of. And you're following what are the actual guidelines, not something that somebody is pressuring and pressuring you into. Michael, these are some fantastic tips for folks that may be looking for a financial advisor. How can they get a hold of you? Yeah, absolutely. So feel free to reach out, research us. We're happy to help you. We specialize in health care workers and their families, so love to take care of them. Often, you know, the education with the student loans goes hand in hand with health care workers. So we'd love the opportunity to serve you. Well, Michael, we appreciate your time this morning. Thank you. Wealth of knowledge here.