Here’s how to qualify for a fresh start on your student loans.
Here’s what you need to know.
There’s student loan payment suspension, student loan forgiveness, student loan forgiveness, and now a new plan to help millions of student borrowers get a “fresh start” on their student loans.
Student loans: a new start for student borrowers
The U.S. Department of Education helps student borrowers who are in arrears or default on their student loans get a fresh start on their student loans.
Student loan default
A borrower is in student loan default on the first day after missing a student loan payment. After at least 90 days of missed student loan payments, your student loan manager will report the default to the three major credit bureaus: Equifax, TransUnion, and Experian.
Student loan default
If you continue to be delinquent on your student loans, you could be at risk of defaulting on your student loan. Student loan default occurs when a borrower misses at least 270 days of student loan repayment.
If you were in default or in default prior to the Covid-19 pandemic, the Biden administration will rehabilitate your student loans and automatically put you in good standing. More than 10 million borrowers are in default or default on their federal student loans, so this would be a major benefit for those borrowers. Federal student loan payments are currently suspended until August 31, 2022. The Department of Education said it will implement the “fresh start” process during the extension. When student loan repayments resume, these affected student borrowers will be able to enter student loan repayment in the ordinary course.
Repaying a student loan: what to do if you are having financial difficulty
If you’re struggling to repay your student loans, you’re not alone. The Covid-19 pandemic has been a financial burden for many student borrowers. Before the pandemic, millions of student borrowers were also struggling financially. What can you do once student loan repayments resume?
- Contact your student loan service: Share your financial situation in advance with your student loan officer so that you can explore the options available for student loan repayment.
- Sign up for automatic payment: Sign up for automatic payments from your bank account so you don’t go into student loan default or student loan default due to missed payments.
- Consider postponement: Contact your student loan officer for potential forbearance or deferment options. It is important to note that these are temporary measures and you should understand how interest may accrue on your student loan balance during this time.
- Sign up for income-oriented reimbursement: Income-driven repayment plans such as IBR, PAYE, REPAYE, and ICR are smart options if you’re struggling financially. Your federal student loan payment is based on your discretionary income and family size. It is possible to pay as little as $0 per month and get student loan forgiveness after 20 or 25 years.
These are not the only options for student loan repayment. As you work through your options, be sure to explore the best ways to repay student loans based on your personal situation and financial goals.
Here are some popular ways borrowers pay student loans: