According to the Consumer Financial Protection Bureau, 1 out 5 student loan borrowers will have difficulty in paying the student loan payments when it resumes. The student loan repayments will start in the fall after being paused during the pandemic. Many student loan borrowers are now expected to start the payments by the end of August.
Student Loan Borrowers on 12-Month “On Ramp” Repayment as Leeway To Avoid Worst Consequences On Missed Payments
Photo From: Bloomberg.com
Student Loan Borrowers on 12-Month “On Ramp” Repayment
To address the issue on missed payments when the repayment starts, the Biden administration will be helping out student loan borrowers.
The U.S. Department of Education will start the 12-month “on ramp” to repayment from Oct. 1, 2023, to Sept. 30, 2024 to help student loan borrowers avoid other consequences if they miss their first payment.
During the Pandemic, the federal loan bills had been paused 8th times by the Trump Administration. With the latest announcement from President Biden, the payment for the student loan will resume in the last week of August.
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Student Loan Borrowers on 12-Month “On Ramp” To Avoid Late Payments Fee
The 12-month “on ramp” will not spare any student loan borrowers for their student debt. But if they happen to miss the first round of payments, they will not be charged of any late payments fees and will not be reported to credit to credit reporting agencies.
However, if the borrower won’t be able to make payments in the succeeding months, the interest will continue to be added on the student debt.
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