Restart of student loan payments is here and there are serious consequences if you fail to pay.
A hit to credit scores is one of the many consequences borrowers may face if they fail to pay their student loans. (Photo: AARP)
The Restart Of Student Loan Payments
Student loan payments have resumed since the end of the COVID-19 pandemic. Interest on the loans began accruing on September 1, even before payments were due. Many borrowers are expected to struggle with the restart of student loan payments, with 45% anticipating delinquency.
Failing to pay student loan payments can have serious consequences, such as a hit to credit scores and potential wage garnishment. However, during the one-year on-ramp period, which lasts until September 30, 2024, the negative consequences of not paying student loan payments will be paused.
It is important to note that interest on student loan payments will still accumulate during this period. If borrowers cannot afford to pay their student loan payments, they should contact their lender to explore options such as deferment, forbearance, or income-driven repayment plans.
According to a published article by CNET, the SAVE plan introduced by the Biden administration ties student loan payments’ size to income and family size. Borrowers must stay informed about their options and communicate with their loan servicer for a more sustainable student loan payments strategy.
One-Year On-Ramp Period
In a published article by Hindustan Times, there is currently a one-year on-ramp period for student loan payments in the US. This period lasts from October 1, 2023, to September 30, 2024. During this time, it will not be considered delinquency or default.
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