Advice for student loan borrowers now the payment pause is over

Fortune

As a reaction to COVID in 2020, the government halted all student loan payments and interest. But bills will be due again in October. Anna Anderson of the National Consumer Law Center offers guidance on navigating the change.

Transcript

00:00 In March 2020, the national emergency led to the government

00:04 putting a pause on most federal student loan payments

00:08 and interest.

00:10 Congress passed a law to end the payment pause

00:12 on September 1st, 2023.

00:15 In September, borrowers will receive their first bills

00:18 on their student loan payments

00:20 for the first time in nearly three years.

00:22 This means that borrowers really need to take steps

00:25 to prepare for repayments to resume

00:27 and for their first bills to actually be due in October.

00:30 Go online and log into your studentaid.gov account.

00:41 You should be able to see what the status of your loans are,

00:45 who your loan servicer is, who your loan holder is,

00:48 and what your payments will be or were

00:52 before the pandemic pause started.

00:55 Make sure that your contact information is updated

00:59 on your studentaid.gov account,

01:01 but also on your account with your loan servicer.

01:03 Many people have had their loan servicer change

01:06 during the pandemic payment pause,

01:09 which is really something that you need to pay attention to

01:12 because if your loan servicer changed,

01:14 you want to make sure they have

01:16 all of your contact information

01:17 so you don't miss any important emails or letters

01:21 about your student loan payments.

01:23 about your student loan payments

01:25 resuming again in September.

01:27 Despite what the Supreme Court decided in June,

01:35 there are actually still a number of cancellation

01:38 and loan forgiveness programs that are out there

01:40 for borrowers, such as programs to cancel loans

01:44 for public service workers, including teachers,

01:47 firefighters, nonprofit workers,

01:50 and programs for people who cannot work

01:53 due to disability, people who have been lied to

01:57 by their school to get them to enroll,

01:59 and also people who have just been paying on their loans

02:01 for 20 to 25 years.

02:03 If you're in one of those situations,

02:05 you might be eligible for loan forgiveness

02:07 cancellation right now,

02:09 and you should really look into those programs

02:11 before payments resume.

02:12 If you think that the payment is going to be too high

02:19 and you're going to have trouble making that payment

02:21 in October when it is first due,

02:23 you can switch your payment plan.

02:25 And with the new income-driven repayment plan

02:29 that was just announced by the Biden administration,

02:31 the SAVE plan, you actually will see

02:34 that student loan interest will not be added

02:37 to your payments while you are making your payments monthly.

02:41 So that is big news for borrowers.

02:42 So it's a really great plan.

02:44 Many more borrowers are going to be eligible

02:46 for a $0 a month bill.

02:49 (upbeat music)

02:51 For any borrower that had their student loans paused

02:56 during the pandemic,

02:57 if they miss a payment or can't make a payment

03:01 during the first year, once payments resume,

03:05 they will not face any credit consequences

03:07 and will not have their loans put into default

03:10 until October 2024.

03:12 So if your student loans were in default

03:18 before the pandemic payment pause went into effect,

03:21 they're still going to be in default unless you take action.

03:25 Now, the good news is, is that there is a temporary program

03:29 to give student loan borrowers in default a fresh start.

03:32 All you have to do is go online or call

03:36 to ask to have your student loans removed from default.

03:39 The process takes less than 10 minutes

03:41 and you will be able to quickly and easily

03:43 get your loans out of default.

03:45 (upbeat music)

03:48 There are a lot of companies and scammers out there

03:52 that are trying to take advantage of the confusion

03:54 in the student loan system right now

03:56 and may try to tempt you with offers

03:59 that really are too good to be true,

04:01 such as anything that promises student loan forgiveness now

04:04 or promises to lower your payments for a fee.

04:08 Watch out for that.

04:09 Those are probably scams and likely not something

04:12 that you're going to benefit from.

04:13 (upbeat music)

04:16 (upbeat music)

Category

Transcript

Recommended