LAS VEGAS (KTNV) — Nearly 5 million people across the country have not made payments on their student loans for nearly a year (360 days), according to the U.S. Department of Education.
But starting May 5, the department will begin collecting money from those who have defaulted, the department announced last Monday.
WATCH | What the federal collection efforts will mean for Nevadans
The mandatory collections come after a five-year pause sparked by the COVID-19 pandemic.
Bethel Kifle, a second-year mechanical engineering student at UNLV, has only taken out one student loan so far.
"I was taking summer classes and since I couldn't use the fall scholarship yet, I just took out a loan, so I don't have to use my personal money cause again, I need it for — to pay other stuff like bills and stuff. The loan helped me get through that summer without being zero dollars in my banking account," Kifle said.
Even though she won't be required to pay the loan back until after graduation, Kifle already has a plan in place.
"The big scholarship I had, I ended up getting like $9,000 refund, so I saved that money just so I can use to pay back the loan that I took out," Kifle said.
But not everyone is as prepared. According to the U.S. Department of Education, 42.7 million borrowers have more than $1.6 trillion in student debt.
Roughly $12.4 billion of that money is owed by Nevada borrowers, according to the Education Data Initiative. Nearly 12% of them are in default.
"If you take out a loan, you have to pay it back, it's very simple," said Karoline Leavitt, White House press secretary.
While no loans have been sent to collections since 2020, Trump administration officials announced that will no longer be the case. They say people who don't make a repayment plan by the May 5 deadline could face involuntary collections.
WATCH | Student loans in default to be referred to debt collection, Education Department says
"The government can and will collect defaulted federal student loans debt by withholding money from borrowers, tax refunds, federal pensions and even their wages," Leavitt said.
Kifle's recommendation for her fellow students is to keep applying for scholarships.
"Every semester, I'm still applying to scholarships. Loans should be the very last resort," Kifle said.
All borrowers in default will receive email communications from Federal Student Aid (FSA) over the next two weeks making them aware of these developments and urging them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.
Detailed information to help borrowers get out of default is also available at StudentAid.gov/end-default.
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