![]() “Taxpayers just got sucker punched – again – by this administration,” said Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) in a statement on Friday. ![]() In addition to providing borrowers with the new on-ramp initiative, President Biden promised to find a new way to provide student loan forgiveness to borrowers in response to the Supreme Court ruling.Ĭongressional Republicans were swift to criticize Biden, accusing him of finding a backdoor route to extend the benefits of the student loan pause. Republicans Accused Biden Of A Backdoor Extension Of The Student Loan Pause In that regard, key elements of the student loan pause are effectively extended for these borrowers. And during the Fresh Start period, borrowers in default will continue to be shielded from collections efforts, financial penalties, and negative credit reporting associated with defaulted federal student loans. The Fresh Start program will be available for one year after the payment pause ends, just like the on-ramp transition period. ![]() Restoring defaulted federal student loans to good standing is critical in order to access key federal student loan forgiveness programs, such as Public Service Loan Forgiveness or the benefits of the IDR Account Adjustment. Separately from the on-ramp initiative, the Biden administration’s Fresh Start program will provide borrowers in default on their federal student loans with a one-time, temporary pathway to return to good standing. ![]() Fresh Start Program Will Still Protect Defaulted Student Loan Borrowers In order to continue making progress toward loan forgiveness under IDR and PSLF, borrowers would need to make qualifying payments. “Missed payments will not count toward loan forgiveness under any of the income-driven repayment plans or Public Service Loan Forgiveness,” said Cardona. The months of suspended payments can be credited toward loan forgiveness terms as if the borrower had been making payments.īut that will not be the case for the one-year on-ramp period. Under federal law, the 41-month student loan pause period can count toward student loan forgiveness under programs like Public Service Loan Forgiveness and Income-Driven Repayment, even if no payments have been made. Missed Payments During Transition Period Will Not Count Toward Student Loan Forgiveness They just won’t experience negative consequences (other than interest accrual) if payments are missed. “Borrowers who can make payments should do so, as payments will be due and interest will accrue during this transition period,” warned Cardona. Interest will start accruing again on federal student loans in September, and payments will become due in October. While the on-ramp program will prevent borrowers from experiencing negative consequences associated with missed payments, this is not the same thing as an extension of the student loan pause. On-Ramp Initiative Does Not Mean Student Loan Payments Won’t Be Due The on-ramp year will serve as an extended grace period, during which borrowers will not be penalized for missing payments.ĭuring the on-ramp period, “missed, partial, or late payments will not lead to negative credit reporting, default, or loans being sent to collection agencies,” said Education Secretary Miguel Cardona in a statement over the weekend. In response to these concerns and last week’s adverse Supreme Court ruling, Biden announced on Friday that there would be a 12-month “on-ramp” initiative as borrowers transition from the student loan pause back to the resumption of repayment. Borrowers deprioritize their student loan payments relative to other debts, suggesting that some borrowers who are struggling but not currently behind on other payments may still struggle with the return of their student loan payments” New ‘On-Ramp’ Program Will Extend Some Debt Relief Associated With Student Loan Pause For 12 Months “Student loan borrowers who are already having difficulty with their other payment obligations are especially likely to struggle with their student loan payments. “Borrowers with large balances relative to their income may find their scheduled monthly student loan payments especially difficult to manage if they are not enrolled in income-driven repayment (IDR) plans when the payment pause ends,” warned the Consumer Financial Protection Bureau in a report last month.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |