For the first time since March 2020, millions of federal student loan borrowers will have a payment due in October. When making payments, borrowers should consider their options as many may be able to lower their payments or even have their loans cancelled. If borrowers have complaints about their student loans, they should file them with the CFPB.
Restarting student loan payments represents a significant change in financial circumstances for millions of borrowers, many of whom will be making payments for the first time since graduating. According to CFPB research, many people who have student loans are already behind on other debt payments and face the possibility of going into delinquency. If student loan payments start up again, these situations could get worse. Through income-based repayment plans and other loan cancellation options, borrowers may be eligible to lower their loan payments or even have their loans cancelled. Borrowers should look into ways to lessen or completely eliminate their student loan burden before beginning payments.
Regretfully, the Consumer Financial Protection Bureau (CFPB) has discovered that certain student loan servicers have obstructed borrowers’ access to reduced payments and loan cancellation programs. Our efforts to monitor, enforce, and supervise complaints have revealed red tape, mistakes, delays, and even unlawful activities that resulted in borrowers paying more than they ought to have.
The CFPB is working to make sure that servicers abide by the law and that consumers are protected as borrowers get ready for their student loan payments to resume. We will be closely examining the practices of loan servicers, the outcomes of borrowers, data from other regulators, and concerns brought forth by consumer complaints.
Here’s what you should know if you plan to begin repaying your student loans in October, as well as what to do if you encounter problems with your loan servicers.
Find the latest
The suspension of federal student loan payments has ended after three and a half years.
Student loan balances began accruing interest again on Sept. 1, and bills resumed in October. You can check your account online or give your student loan servicer a call to find out the precise date of your monthly bill.
You have a safety net if you didn’t receive your October bill: the one-year student loan “on-ramp.” Between Oct. 1, 2023 and Sept. 30, 2024, borrowers who dont make payments wont default. However, interest will continue to accrue during the on-ramp, raising their total debt.
President Joe Biden stated in a June press conference, “If you can pay your monthly bills, you should during this period,” following the Supreme Court’s blocking of his plan to waive up to $20,000 in student debt per borrower. “However, this on-ramp momentarily eliminates the risk of default or credit damage, which can harm borrowers for years to come, if you are unable to make payments or miss them. “.
You still have time to make your student loan payments, even if you’re starting late. Heres what you need to know.
When are federal student loans due?
First monthly payment after the pandemic pause was due in October, unless you graduated recently and are in your loan grace period.
The terms of your loan determine the amount and date of your monthly payment. That data is available through your monthly statement, by getting in touch with your loan servicer, or by visiting your servicer’s website.
What did the payment pause do?
Under then-President Donald Trump, the interest-free student loan payment suspension, or forbearance, was implemented as an emergency pandemic measure in response to the COVID-19 pandemic in March 2020. In the end, it was extended nine times in a span of thirty-five months.
Borrowers of federal student loans were permitted to forgo payments during the suspension. Autopay loans were discontinued, and efforts to collect delinquent loans were also put on hold. Interest did not accrue.
Start planning for repayment now
Although repayment has already started, it’s still not too late to create a plan. You should take the following actions right away to get ready for repayment:
- Locate your student loan servicer. Since forbearance started, the organization in charge of your student loans may have changed. Find your servicer by logging into StudentAid. gov.
- Contact your servicer. Visit the website of your provider or contact them via phone. Update your contact information. Find out how much your bills could be each month, how much you might owe when payments resume, and what payment options are available to you. By setting up automatic payments, you may be eligible for a zero 25 percentage point interest rate discount .
- Consider an income-driven repayment plan. You can apply online or have your servicer assist you in signing up for an IDR plan. These programs reduce your monthly expenses to a predetermined percentage of your disposable income. It’s a good idea to apply as soon as possible so that your payments reflect the lower amount when repayment begins, even if your payment is as low as $0 per month.
Revised Pay As You Earn (REPAYE) plan was superseded by a new IDR plan called SAVE, which Biden announced on June 30. By enrolling in SAVE, qualified borrowers could save a substantial sum of money. You can apply for SAVE online and determine which plan would have the lowest payment using the federal loan payment simulator.
To restore your loans to good standing if they were in default prior to the start of forbearance, sign up for the short-term Fresh Start program.
Will my loans get cancelled?
Broad student loan cancellation is on hold. In June, the Supreme Court struck down President Joe Biden’s plan to cancel student loans, stating that the HEROES Act did not give his administration the authority to waive up to $20,000 in debt for each borrower.
Biden is seeking the cancellation of student loans through a different legal avenue, but experts say there is little chance of success and that it could take a year or more to implement. In the interim, payments are due, so please make them.
Additionally, under a one-time program known as the IDR account adjustment, if you have been repaying your federal student loans for at least 20 or 25 years, you may be eligible to have the remaining balances forgiven. This forgiveness is automatic for most longtime student loan borrowers.
FAQ
Are student loan payments resuming?
September 1, 2023 marked the return of interest on federal student loans, and October 2023 saw the start of payments. Certain members of the credit union might find it challenging to fulfill their repayment commitments when the federal student loan program begins.
Did they extend student loan forbearance?
Nov. 22, 2022: The COVID-19 emergency relief measures were extended. Congress passed a law on June 7, 2023, ending the payment pause and prohibiting any more extensions. Student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October.
Will interest resume on student loan payments?
Interest on student loans resumed on September 1 following the end of the COVID-19 payment pause. Student loan payments resumed in October.
Is interest accruing on student loans during pause?
It’s best to save these options for last because interest may continue to accrue while your payments are paused, depending on your circumstances and the type of loans you have. If you want to avoid having interest added to your principal balance at the end of your deferment, you can also choose to make interest-only payments.
Read More :
https://www.nerdwallet.com/article/loans/student-loans/federal-student-loan-forbearance-extended-yet-again
https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/resumption-federal-student-loan-payments