Key Takeaways While the Department of Education paused wage garnishments on student loan borrowers in default, borrowers can use this time to get back into good standing before collections resume. Borrowers can consolidate their student loans or apply for loan rehabilitation, which will help them exit default and restore their loans to good standing. More than 5.5 million borrowers are in default on their student loans. These borrowers face damaging credit report entries, loss of eligibility for fu ...

Once a borrower defaults, their entire loan balance, including both principal and interest, becomes immediately due. Wage garnishments will continue until the total loan balance is paid off or the borrower takes action to bring the account up to date. In addition, once defaulted, a borrower can no longer pause their payments through deferment or forbearance. Why This Matters Wage garnishment can reduce take-home pay by up to 15%, making already tight household budgets harder to manage. For borrowers in defa ...