Defaulted federal student loan collections resume, sparking anxiety for many

FOX 2 - Starting today the Department of Education will resume collection on defaulted federal student loans.

It comes nearly five years after the federal government paused the loan payments and interest as a relief effort during the Covid pandemic.

"I’m distraught actually," said Isis Gibson. "My lowest payment that they allowed is like $300 which is a lot especially when I expected them to be forgiven."

She’s talking about attempts by the Biden administration to establish a student loan debt relief program, but those efforts were hindered by the US Supreme Court.

"I think that’s very unfair," Gibson said.

"If you took out the debt in good faith, now pay it back. If you were allowed to go to college, which you probably couldn’t before, pay the debt back," said David Sowerby, Ancora Investments portfolio manager.

As people work to resume payment on defaulted federal student loans, experts don’t believe it will impact the overall economy.

"It may have some impact on the overall health of the economy," Sowerby said. "Particularly in the all-important consumer sector, but at end of day the impact on total economy is going to be minimal."

Now that the pause has been lifted many want the Trump administration find a way for people to pay back those loans without it hurting their bottomline.

"I think students should pay but they should have a break also or some help," said Sarah Moore, a retired educator. "If we can assist other countries - and forgive other countries, for example - I understand Ukraine is not going to have to pay the money back the government has given them, we need to take care of our own first."

"Student loan program aces, not paying back the debt and forgiving it, (harms) the economy, and that’s not what we need to have the US ... to flourish."