Thousands of people with student loan debt need to be paid off – see if you qualify

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Thousands of people with student loan debt need to be paid off – see if you qualify

The very first COVID-19 relief bill, enacted in March last year, prohibited student loan companies from garnishing the salaries of defaulting borrowers.

But thousands of people still saw part of their wages seized despite the moratorium, due to the slowness of the takeover by the government at the start of the pandemic.

More than a year later, nearly 11,000 of those borrowers are still outstanding, according to information obtained by the National Student Legal Defense Network, a Washington-based nonprofit also known as Student Defense. .

Many Americans who are struggling to manage their debts might be eligible to receive money – and may not even know it.

Hundreds of thousands of people had money withheld

Woman holding paycheck or paycheck

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Usually, when student loan borrowers haven’t made a payment for more than 270 days, they’re in default – and student loan managers can start garnishing their paychecks.

Up to 15% of a borrower’s salary can be withheld and sent to the loan manager until the debt is paid off or the default status is resolved.

When the CARES Act – the first COVID bailout – was enacted on March 27, 2020, the US Department of Education was supposed to advise employers to stop withholding money from employee paychecks to meet requirements. student loan obligations.

But Student Defense discovered, through an access to information request, that the Education Department and the Treasury had improperly seized and withheld more than $ 200 million from more than 390,000 borrowers after the entry into force of the law, according to several media.

Refunds in the hundreds of dollars

According to the Federal Inspector General, some 1,930 borrowers still had their wages garnished in October last year, almost seven months after the enactment of the CARES Act.

Two weeks ago, the Department of Education informed Student Defense that it had repaid $ 187 million to more than 382,000 borrowers by the end of July. This works out to an average of almost $ 500 per person.

But the ministry says it has been unable to issue nearly 11,000 overdue repayments.

The government says it can’t repay the money because officials don’t have the right addresses for borrowers.

How to get a long-lost refund

Young focused couple looking at computer sitting at the kitchen table.

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Here’s the result: If a portion of your paycheck has been inappropriately embezzled and your address hasn’t changed recently, keep your eyes peeled for any seemingly official mail.

If you’ve moved since March of last year and think you’re eligible for a refund, you should contact your loan officer to make sure they have your current address.

Federal student loan payments and interest were suspended in March 2020 and will remain so until January 31, 2022.

Some 45 million Americans currently share $ 1.7 trillion in student debt. The 15-month stoppage of payments saved borrowers about $ 72 billion in interest, according to an estimate by a group of U.S. Democratic senators.

Democrats led by Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren urged Biden to give borrowers a large loan forgiveness – up to $ 50,000 per person – but the administration did not take no decision on this.

No refund ? Here’s how to find relief

A young woman chews a pen while looking at her cell phone in her hand.

dashapats / Twenty20

If you’re not getting one of your student loan payments and are already struggling to manage your debt, even before your loan payments resume, you have several options.

  • Refinance your loan. Interest rates on student loan refinances through private lenders have reached historic lows. Refinancing your student loan could lower your monthly payments. If the blanket cancellation of federal loans ever materializes, it will not extend to private refi loans.

  • Extend savings to your home loan. If you’re a homeowner and haven’t refinanced your mortgage recently, you’re probably overdue. A recent Zillow poll found that nearly half of people who refinanced ultra-low mortgage rates in the past year are now saving $ 300 a month or more. Refi loans are currently available at rates well below 3% or even below 2%.

  • Borrow at the lowest cost. If a student loan or refi mortgage sounds appealing, keep in mind that the best interest rates go to borrowers with the highest credit scores. Take a quick, free look at your credit score and see if it needs some work before you start contacting lenders.

  • Turn your pennies into profits. Even when your budget is depleted, you could earn a little extra income with the help of the record-breaking stock market. A popular app can help you invest in a diversified portfolio using only your “coin” from your daily purchases.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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