Student loan payments to resume in October

It might seem tempting to just keep not making payments, but the consequences can be severe, including a hit to your credit score and exclusion from future aid and benefits.

If you’re struggling to pay, advisers first encourage you to check if you qualify for an income-driven repayment plan, which determines your payments by looking at your expenses. You can determine this by visiting the Federal Student Aid website. If you’ve worked for a government agency or a non-profit organization, you could also be eligible for the Public Service Loan Forgiveness Program, which forgives student debt after 10 years.

Rodriguez says her organization always advises against deferment or forbearance except once a borrower has exhausted all other options. In the long term, those financial choices offer little benefit, as some loans will continue to accrue interest while deferred. “That doesn’t mean people shouldn’t look into it,” Rodriguez said. “But they may not be successful at discharging their loans.”

“Though it is difficult to get your loans discharged through the bankruptcy process, an increasing number of borrowers are eligible to get their loans discharged that way,” she said. “A lot of people write that off as ‘there’s no way,’ it’s impossible.’ But it’s increasingly possible.”When you fall behind on a loan by 270 days — roughly 9 months — the loan appears on your credit report as being in default.

Shafroth encourages borrowers to look at the Student Aid website to see what their options might be before missing payments.Under the Biden administration’s Fresh Start program, borrowers with federal student loans who were in default before the pause have a chance to become current.

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