SALT LAKE CITY — Collections for student loans resumed on Monday, and for those who haven’t made a payment in more than 360 days, the Department of Education says your loans may be in default.
More than 5 million borrowers are in default according to the Trump Administration, with their collections having been paused since March 2020. If a borrower's loans go to collections, the government can withhold tax refunds, paychecks, or other federal benefits.
A visit to the Federal Student Aid website will give everyone a quick look at their loan status.
The resumption of collections is coming at a difficult time for many.
“People are already tapped out, and they don’t have any more to give," said Mikal Aune with Smedly Financial Services. "Throw on top that now some of them may have to restart paying loans that they hoped would be forgiven, it makes you worry about the economy, the stability of some people, and just their ability to stay afloat.”
As Vice President of Wealth Management for Smedley, Mikal Aune has seen a lot lately.
"It unsettles people to where they feel a little uneasy about the future and what's going to happen, and they start wondering, what am I going to do to make sure I’m OK and secure?” he shared.
Salt Lake Community College student Summer Jensen is already feeling that anxiety.
“It’s easy to not think about it while you’re in school because you’re not paying it, but some of my friends just graduated and some of them are paying $800 a month for their student loans," Jensen explained.
For students like Jensen, she says loans played a role in their college decision.
“Money was the biggest factor because I wanted to go to the [University of Utah], but SLCC is more affordable,” she said.
“I chose the [University of Utah] because I got a scholarship to go here,” said student Cyrus Curtis.
Even with his scholarship, Curtis still had to take out student loans.
“I think it’s unfortunate and I think it’s scary for a lot of people," he added. "One of my friends, he dropped out, but he says I just want to go back to school just so I don’t have to pay for the loans anymore.”
While students currently enrolled in school don’t have to pay their loans, they say they’re taking precautions early, and if you're in default already, there are options.
“The Department of Education has a default resolution group, where you can see if you can create a payment system, so that you can do it based on your income, not on your actual loan repayment schedule," Aune explained.
Aune shared that it’s helpful to chip away at the loan payments because it will help in the long run.
