BUSINESS + ECONOMY

What to do, now that the grace period for student loan payments is over

Oct 4, 2024, 6:00 AM

FILE: Those with student loan debt demand President Biden use "Plan B" to cancel student debt Immed...

FILE: Student loan borrowers demand President Biden use "Plan B" to cancel student debt Immediately at a rally outside of the Supreme Court of the United States on June 30, 2023 in Washington, DC. (Paul Morigi/Getty Images for We The 45 Million)

(Paul Morigi/Getty Images for We The 45 Million)

The 12-month grace period for those with student loan debt ended on Sept. 30. This so-called “on-ramp” period helped some borrowers avoid the risk of defaulting and hurting their credit score.

“The end of the on-ramp period means the beginning of the potentially harsh consequences for student loan borrowers who are not able to make payments,” said Persis Yu, Deputy Executive Director at the Student Borrower Protection Center.

Around 43 million Americans have student loan debt. That amounts to $1.5 trillion. Around eight million of those borrowers had enrolled in the SAVE plan. That’s the newest income-driven repayment plan that extended the eligibility for borrowers to have affordable monthly student loan payments.

However, this plan is currently on hold due to legal challenges.

With the on-ramp period and a separate program known as Fresh Start ending and the SAVE plan on hold, some student loan borrowers who are struggling to afford their monthly payments have fewer options, added Yu. Student loan borrowers who haven’t been able to afford their monthly payments must consider their options to avoid going into default.

If you have student loans, here’s what you need to know.

What did the on-ramp period mean for those with student loan debt?

The Education Department implemented this grace period to ease the borrower’s transition to make payments after a three-year payment pause during the COVID-19 pandemic. During this year-long period, borrowers were encouraged to keep making payments since interest continued to accumulate.

There’s much more to this Associated Press story, which you can read here.

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What to do, now that the grace period for student loan payments is over