Betsy Mayotte

So federal student loans, they've always garnished the wages for defaulted borrowers.

Speaking of things that never happened before, during COVID, they stopped.

And we actually thought they were going to reinstate the garnishment of wages last year, but for whatever reason, they didn't.

And they did announce, though, at the end of last year that they were going to start this month.

And then, as you mentioned, on Friday, they went, oh, never mind.

We're not going to start yet.

And in addition to not starting wage garnishment, they announced they were going to stop offsetting people's tax refunds, which is something they did start up again last year.

As again, as I mentioned.

They've always garnished the wages of defaulted student loan borrowers if those borrowers have failed to set up a repayment plan or resolve the default.

I'm not sure why they decided at the last minute to not start doing it again.

I want to emphasize that I do think this is a temporary reprieve.

I would not be surprised if they started doing it again either after July 1st when a lot of the HR1 provisions come into play or after midterms.

Boy, did it ever.

So as far as existing borrowers go, some of the changes include they're introducing a new repayment plan called the RAP plan.

And for some borrowers, that plan is going to be more beneficial than existing plans.

And for some borrowers, it's going to be nowhere near as beneficial as existing plans.

HR1 also sunsets or gets rid of some plans, some of the plans based on income, such as what we call the pay-as-you-earn plan or income contingent.

Those are being phased out in 2028.

For people that borrow or consolidate on or after July 1st, they will actually not have access to any of the existing plans that exist today and will only be able to use this new RAP plan or

what we're calling the tiered standard plan, which is essentially a plan where your payment's the same every month and the amount of time you have to pay it back depends on how much you owe.