The student loan payment pause, which ended on August 30, 2023, is leading borrowers to prepare for repayments set to begin next month. This follows the Biden Administration's announcement of a plan to cancel $39 billion in loans for 804,000 borrowers. In light of this, borrowers have been advised on several fronts.
Firstly, updating personal contact information with both studentaid.gov and loan servicers is crucial. Borrowers are also encouraged to consider requesting refunds for payments made after March 13, 2020, as these could count towards forgiveness under the Public Service Loan Forgiveness (PSLF) program.
Income-Driven Repayment (IDR) plans need annual certification; failing to do so results in conversion to a standard repayment plan with higher payments. Although automatic payments were halted during the pause, they will not restart automatically. Borrowers must contact their servicers to resume these payments.
To support borrowers returning to repayment, the U.S. Department of Education has introduced an On-Ramp program from October 1, 2023, through September 30, 2024. This initiative prevents loans from falling into delinquency or default if payments are missed during this period and ensures no negative credit reporting or debt collection actions occur. However, interest will still accrue.
Additionally, the Biden Administration has unveiled the Saving on a Valuable Education (SAVE) repayment plan aimed at making payments more affordable and preventing interest accruals for those with undergraduate loans. The plan offers debt cancellation after ten years of repayment for those who borrowed less than $12,000.
Borrowers should determine their loan types by logging onto studentaid.gov and consider consolidating commercially held loans before December 31, 2023. Those seeking PSLF should complete relevant forms promptly and take action if in default by participating in the Fresh Start program.
With numerous changes occurring within student loan programs, there is an increased risk of scams targeting borrowers. Ensuring information comes from reliable sources is essential.
AMBA and its member banks continue offering services supporting financial independence and literacy among service members and veterans.