The millions of student loan borrowers struggling🍸 to make payments ▨could soon face a predicament as collection efforts resume.

The Department of Education said 5 million borrowers have defaulted on their federal student loans, and expects 4 million more to default in the next few months. Starting May 5, the department plans to resume the collection of defaulted loans, eventually leading to involuntary wage garnishment for some borrowers.

Over the last five years, 澳洲幸运5官方开奖结果体彩网:pandemic-era pauses, court cases related to the 澳洲幸运5官方开奖结果体彩网:Saving on a Va🌠luable Education repayment plan, and a 澳洲幸运5官方开奖结果体彩网:change of administrations have caused tumult and confusion for many student loan borrowers. Now, looming collections have some borrowers distressed.

“I’m not against paying my loans back, I took them out and went to school. But without affordable repayment options or programs, it just seems really suffocating for a large amount of borrowers," one user with student loans posted on Reddit.

Collections Will Likely Make it Harder for ⛦Borrowওers to Pay Other Debts

Borrowers who have not paid for at least 270 days could see up to 15% of their income, tax refund, or federal benefits withheld and sent to their loan holder starting this summer. And that could have repercussions on other parts of student loan borrowers' financial lives.

American consumers are already struggling to pay their debt. In a recent study by digital finance company Achieve, one in three consumers said their debt is unmanageable, and 36% said they can't pay all their bills on time.

"Many borrowers may have taken on more debt than they can manage during the moratorium, and student debt may now sit lower in the payment hierarchy," wrote Shandor Whitcher, a Moody's Analytics economist, in a blog post.

Paying off additional bills can be harder for student loan borrowers who have other debt and have part of their income cut from wage garnishments. According to Achieve, 37% of student loan borrowers who reported missing a payment on any type of debt said they did so because they ran out of money.

Credit Hits Can Make New Debt More Expensive

The 澳洲幸运5官方开奖结果体彩网:average FICO score fell in February, mainly driven by about 2.7 million delinquent student loan borrowers whose missed payments were reported to cr💎edit bureaus for the first time in five years.

Research from the Federal Reserve Bank of New York estimates that more than 9 million borrowers hold delinquent stu🐷dent loan debt and coওuld see thei💮r scores fall as much as 171 points.

Borrowers with lower credit scores typically have more debt and are more likely to say their debt is unmanageable than those with higher scores, according to Achieve. In addition, missed payments stay on a borrower's report for seven years, leading to reduced credit limits, increased interest rates on new loans, and less access to credit.

"While [the average credit score fell] only two points right now, it's going to continue to get worse," said Jack Wallace, director of government and lender relations at Yrefy, a private student loan company.

Defaulted borrowers can consolidate their loans or enter a rehabilitation program to avoid the adverse effects ofᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚ wage garnishments and c✃ollections. Delinquent borrowers have 澳洲幸运5官方开奖结果体彩网:a few more options before they are put into default status, includi✱ng signing up for lower payments und༒er an income-driven repayment plan or applying for forbearance.