ATLANTA — Major decisions on credit card fees, bank fees and student loans have been made in the last few weeks that will affect many people, especially those living paycheck to paycheck.
Two changes that would have lowered penalty fees were stopped or put in doubt. And the restart of student loans payments, with the potential for wage garnishments, could also cause financial strain.
Here’s what to know:
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Members of U.S. Congress approved a legislative measure to cancel lowering the limit on bank overdraft fees to $5. The current average is around $26, with some banks charging more.
The House of Representatives worked with the U.S. Senate to overturn the Biden administration rule expected to save Americans billions.
The resolution passed in the House 217-211 on April 10, sending it to President Donald Trump to sign into law, or veto, at his prerogative.
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Separately, a federal judge in Texas ruled against a credit card late fee limit.
The Consumer Financial Protection Bureau proposed a rule limiting late fees for payments to $8 per month. When the agency announced it in 2024, it said “typical fees” were $32.
Adding to the list of financial changes impacting everyday Americans’ bank accounts, the U.S. Department of Education announced it would begin collecting student loan payments again starting May 5.
According to the department, it has not collected on defaulted loans since March 2020.
“Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education,” it said in a statement.
The department said about almost 25% of the federal student loan portfolio will be in default for not making monthly payments, or roughly 10 million borrowers.
Those who do not contact the Default Resolution Group to make payments or enroll in an income-driven repayment plan could have their wages garnished.
Wage garnishment is when someone’s earnings are required by a court order to be withheld by an employer so creditors can receive payments.
The Dept. of Education said if your wages are garnished, the law allows them to take 15% from your income, though you may have a hearing to prevent garnishment for a period of a year, or to reduce garnishment levels.
“One way to avoid garnishment of 15% of your disposable pay is to negotiate repayment terms acceptable to your loan holder and ensure that ED receives the first payment no later than 30 days from the date the garnishment notice was sent,” the department said.
The Dept. of Education will also start letting guaranty agencies, who collect debts, to begin involuntary collections on federal loans.
The restart of payment collections for defaulted student loans “will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to payment or get out of default,” officials said.
A page for options on deferment and defaults for student loans is available online from the federal government here.
Click here for more information on who may be in default on federal student loans.
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