Student loan repayments set to resume: what you need to know
Sep 28, 2023, 8:30 PM | Updated: 9:18 pm
(Spenser Heaps/Deseret News)
SALT LAKE CITY — As October approaches, the restart of student loan payments looms for many borrowers. After a pause in March 2020, these payments are set to resume in October.
John Curl, director of financial aid at Utah Valley University, says borrowers should know their options.
Student loan payments were suspended under the Trump administration. This relieved countless individuals struggling with the financial burden of student loans during the COVID-19 pandemic. While payments were put on hold, the interest accrual was also paused, offering borrowers relief.
However, as the restart date approaches, borrowers face the reality of resuming payments that could amount to hundreds of dollars a month.
What to do to repay student loans?
One key piece of advice from Curl is to reach out to your loan servicer as soon as possible if you haven’t been in contact with them during the pause.
Options for repayment are diverse, and loan servicers know how to help towards the most suitable solution tailored to individual circumstances.
Curl emphasized that interest rates remain tied to the loans’ original terms when taken out. So, repayees don’t need to worry about an interest rate increase.
Borrowers do have the option to refinance or consolidate their loans, combining multiple loans into one. This option can be attractive for those seeking a more manageable repayment plan.
While discussing the prospect of loan refinancing, Curl said, “I try not to get into that with folks. I defer that to the loan servicer, where they can guide them to the best product that may help them.”
He also pointed out that external refinancing options are available, but he encouraged borrowers to consider the consolidation process through the Department of Education as their first choice.
One interesting aspect that emerged from the conversation was the varying responses of borrowers during the payment pause. Some chose to continue paying off their loans, taking advantage of the interest-free period. In contrast, others opted for a temporary break in anticipation of potential loan forgiveness programs proposed by the Biden administration.
Where does Utah stack up in student loans?
Curl also sheds light on the broader picture of student financing in Utah. He noted that Utah residents tend to have a debt-averse approach, with many exploring alternative ways to fund their education.
While acknowledging the value of education as an investment in future earning potential, he advised students and families to borrow only what they truly need and no more.
Specific figures were not provided during the interview regarding average borrowing in Utah. However, it was mentioned that Utah tends to have one of the lowest average borrowing rates in the nation.
As October approaches, borrowers nationwide should proactively engage with their loan servicers to determine the best repayment strategy for their circumstances. With careful planning and informed decisions, the post-pause era of student loan payments can be navigated more smoothly.
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