People having trouble keeping up with student loan payments may soon face penalties for the first time since the pandemic.
The federal government ordered payments to resume for many student loan borrowers last year, but it hasn’t reported unpaid loans to credit bureaus. October 1 marked the end of that so-called “on-ramp” period.
Institute of Student Loan Advisors president Betsy Mayotte worries all the recent changes to student loans repayment plans will confuse people.
“Between the new initiatives and the challenges that the servicers have had putting 40-plus-million borrowers all back into repayment at the same time, I truly have never seen anything like this before,” Mayotte said.
The Education Data Initiative reports about one in 10 Montanans carry a student loan.
Mayotte says those on the Biden Administration’s SAVE plan won’t have to make any payments for now. Those accounts are in forbearance while the plan is debated in court.
For most others, payments overdue by three months will now be reported to credit bureaus. Those 270 days past due will face default, meaning portions of their wages could be withheld.
Mayotte recommends borrowers check on the status of their student loan and talk with their loan servicer about repayment plan options.
