Student loan default has serious consequences on a borrower’s life, such as credit score damage, ineligibility for federal student aid, collections costs, wage garnishment and tax refund offsets. Overall, default further expands existing inequities and disparities around education achievement, housing, employment and economic security.
A recent brief from The Institute for College Access and Success (TICAS) highlights a need to reform the student loan default system. TICAS argues the importance of moving away from a punitive system that pushes borrowers deeper into poverty, to one that truly rehabilitates borrowers. Suggestions include limiting borrower-paid collection fees, allowing access to income-driven repayment plans, allowing for bankruptcy relief and more.
Providing help to federal student loan borrowers was the impetus for Ascendium’s Student Loan Start Over program, funded by an Equitable Recovery Grant from the Wisconsin Department of Administration. Our default resolution counseling expertise is available, free, to Milwaukee County residents who want to overcome federal student loan default. Learn more at studentloanstartover.org.