Some Montana student loan borrowers in default could have their wages garnished soon.
The U.S. Department of Education will start sending notices this week to people who haven't made federal loan payments in the past 270 days.
Jack Wallace, director of government and lender relations for the student loan refinancing firm Yrefy, said borrowers need to be aware.
"We need to not put our heads in the sand and pretend like this is gonna go away," Wallace urged. "So if you're getting an email from your servicer, 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."
Montana has nearly 130,000 federal student loan borrowers, according to an Education Data Initiative report. The average debt is around $33,000, totaling $4.4 billion statewide. The report shows more than 13.1% of Montanans have student loan debt.
The federal government uses the Treasury Offset Program to collect delinquent debts. Garnishments can include up to 15% of a borrower's wage and can also apply to 2026 federal tax refunds, Social Security retirement and disability benefits or other government payments.
Wallace noted you have options if you want to change your loan status. He noted contacting the Department of Education's Default Resolution Group is the first step. It provides information on managing student loans, refinancing and getting loans out of default.
"There’s ways to do it," Wallace pointed out. "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 federal government said it will send 1,000 notices Jan. 7, then send more notices each month to the millions of federal loan borrowers in default. Federal loan collections paused during the COVID-19 pandemic and were supposed to resume last summer. It took longer than expected to get the collections system back in place.