The U.S. Department of Education has announced plans to seize a portion of the earnings of millions of borrowers who are in default on their federal student loans. Borrowers have been receiving emails warning them that the government will resume collection activities. According to the department, over five million borrowers are currently in default, and this number could double by year’s end as more borrowers fall behind on payments. The Department of Education plans to use the Treasury Offset program to intercept tax refunds and withhold up to 15% of wages, Social Security benefits, and other federal payments. Administrative wage garnishment will also begin this summer, allowing the government to order private employers to withhold up to 15% of a borrower’s wages without needing a court order. Borrowers must be notified before any garnishment occurs, and they have the right to dispute the debt or request an administrative hearing. Options for borrowers include loan rehabilitation, consolidation, or enrolling in income-driven repayment plans. Those behind on payments but not yet in default can avoid garnishment by bringing their accounts current through payment, deferment, or forbearance.
— new from Forbes