After a 3-year pause, the student loan payments restart in October. Millions of student-loan borrowers will soon receive their first monthly bills after not being asked to make payments on their federal student loans, which will be due in October.
Student Loan Payments Restart: Student-Loan Companies Offer Borrowers Cheaper Payments; Know More | Barron’s
Certain student loan companies are providing borrowers with lower monthly payments ahead of the student loan payments restart in October.
However, by opting for this option, borrowers may lose access to various debt relief programs.
As the student loan payments restart, interest will begin to accumulate on the loan balances of federal borrowers. Additionally, the Supreme Court rejected President Joe Biden’s proposal to forgive up to $20,000 in student debt for these borrowers. Thus, there will be no immediate relief for the borrowers as student loan payments restart.
Certain student loan companies like SoFi, a student-loan refinancing company, started reaching out to federal borrowers to encourage them to refinance their federal debt to get a better deal on payments before the student loan payments restart in October.
Refinancing before the student loan payments restart but borrowers should consider that if you choose to refinance federal student loans, you may lose certain repayment options such as income-based plans or loan forgiveness for public service.
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Borrowers may not be eligible to any student debt forgiveness if their student loans are held by a private lender, once the student loan payments restart.
A Forbes’ article noted reasons why borrowers should not refinance student loans immediately;
- Refinancing student loans with a private lender means once the student loan payments restart, you would no longer be eligible for federal income-driven repayment plans including Biden’s new SAVE plan.
- Biden’s administration announced a 12-month “on-ramp” to help troubled borrowers from October 1, 2023 to September 30, 2024. This program aims to help vulnerable borrowers stay on track even if they miss their monthly payments as the student loan payments restart.
- As the student loan payments restart, there are still various existing student loan forgiveness programs for borrowers with federal loans. There are options Public Service Loan Forgiveness, Teacher Loan Forgiveness, and more.
- Although Biden’s Student loan forgiveness plan was shut down by the Supreme Court, Biden would still attempt to forgive some considerable amount of federal student loan debt through the Higher Education Act of 1965 when the student loan payments restart.
If you earn a high income and believe that you wouldn’t be eligible for federal student loan forgiveness, it may be beneficial to consider refinancing your student loans. By doing so, you can potentially obtain better loan terms and save money in the long run.
