It’s just about official: Thanks to the debt-ceiling agreement, borrowers and the student-loan system now have three months to prepare for the end of the more than three-year freeze on student-loan payments, interest and collections.
How are you preparing for student loan payments to resume? We want to know: Email jberman@marketwatch.com. Both during oral arguments at the Supreme Court and in public comments, Biden administration officials have warned that restarting payments without the debt relief would push many borrowers into delinquency and default on their student loans. In the weeks and months leading up to when payments were scheduled to resume the last eight times, advocates have said that both borrowers and the system weren’t ready for payments to turn back on.
“We know the transition back into repayment will not be easy for borrowers, and we are committed to giving them the information and resources they need to succeed when payments resume,” he said in his written testimony. Some advocates have pushed for the Department of Education to make major changes to the student-loan system before resuming payments so it could better withstand the end of the freeze. The Biden administration has announced several initiatives aimed at transforming the experience of repaying student debt, but many aspects of the system are unchanged from before the pandemic, when more than 1 million borrowers defaulted on their student loans each year.
If that doesn’t seem affordable, borrowers should take steps, including getting in touch with their servicer, to enroll in an income-driven plan. Under these repayment schemes, borrowers repay their debt as a percentage of their income. Get the ball rolling to take advantage of other changes to the student loan system: Borrowers using income-driven repayment plans can have their remaining balance canceled after up to 25 years of payments, but many borrowers spent years in repayment options that didn’t count towards that forgiveness because servicers steered them in that direction, according to the Department.
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