The U.S. Department of Education is alerting student loan borrowers that some of their loan payments could be taken directly out of their paychecks if they’re overdue.
Out of the 55,000 or so student borrowers who live in Wyoming, 1% are in default.
It will affect people who have these federally based loans and have not made a payment for 270 days. Jack Wallace, who directs government and lender relations at the private loan company Yrefy, said borrowers need to be proactive.
"We need to not put our heads in the sand and pretend like this is going to go away. So, if you're getting an email from your servicer soon, which you should be, or getting an envelope by the U.S. Post Office from your servicer, you need to open it up and find out what's going on," he said.
Wallace said options exist for borrowers who want to change the status of their loan. Contacting the Department of Education's Default Resolution Group is the first step. They provide guidance on getting loans out of default.
“There’s ways to do it. Begin to make on-time payments and get it entered into the rehabilitation program so you get out of default, but you've got to make your payments on time, and you've got to make nine of them on time to get yourself back in good graces and get out of default."
The Treasury Offset Program is the automated system the federal government will use to collect delinquent debts. Garnishments can include up to 15% of a borrower's wage, and also applies to 2026 federal tax refunds, Social Security retirement and disability benefits, or other government payments.
Wyoming residents account for $1.7 billion in student loan debt. That’s the lowest in the nation.
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