As feds resume student loan collections, states try to catch borrowers before they sink
By Robbie Sequeira, Stateline.org
Over the past few months, Celina Damian’s phone has been ringing off the hook with one bewildered, anxious question after another: “What kind of loan is this?” “Am I in default?” “Will the government really take my wages?”
“Sometimes they just don’t know where to start,” said Damian, California’s student loan servicing ombudsperson.
“I’m talking to borrowers from all ages, from new borrowers to — I have 80-, 90-year-old borrowers,” she said.
The federal government last month restarted collections on defaulted loans. State student loan ombudspersons such as Damian have become some of the only sources of contact for worried borrowers lost in a tangle of conflicting information at the federal level about their loan status and repayment options.
The U.S. Department of Education began collecting on defaulted student loans in May for the first time since the beginning of the COVID-19 pandemic in March 2020.
Federal student loans issued by the U.S. Department of Education come with fixed rates, set repayment plans and borrower protections. Private servicers handle billing, repayment-plan enrollments and defaults.
