After a 3-year pandemic pause, student loan payments returned on October 1, 2023. Today marks 60 days since student loan payments have returned. Here’s everything that’s happened since then.
The context: Before student loan payments resumed, many studies and news sources reported that an overwhelming number of Americans can’t afford to pay their student loans.
- On August 13, CNBC reported that 56% of borrowers will have to choose between making student loan payments and buying groceries
- On September 24, Yahoo! Finance reported that 62% of borrowers are considering boycotting loan payments.
- On October 6, Vox reported that even high earners are dipping into their 401(k)s and postponing retirement to make their monthly student loan payments.
- In the months leading up to October 1, student loan group Debt Collective organized a debt strike for people who refused to pay their student loans, or wanted to reframe their inability to pay as an act of resistance.
The bigger picture: Student loan servicers have fallen short, but the Department of Education is making strides in forgiving student loan debt through new policies.
- On October 30, the Department of Education announced that they are withholding a $7.2 million payment to MOHELA. The student loan servicer failed to give 2.5 million borrowers their account statements in a timely manner.
- According to CNBC, approximately 814,000 borrowers were given the wrong payment amount by MOHELA. One borrower expected to pay $0, but she was later charged over $2,000.
- On November 8, the Department of Education announced that 5.5 million borrowers enrolled in the Saving on a Valuable Education (SAVE) Plan, an income-based repayment plan that promised to slash borrowers’ monthly payments by half. Data shows that 2.9 million borrowers will have $0 monthly payments due to the SAVE Plan.
- On November 28, according to Business Insider, the Biden Administration sent 813,000 student loan borrowers emails congratulating them on student loan forgiveness under the Education Department’s one-time adjustment to evaluate which borrowers have met the qualifying payment threshold on their repayment plan.
- On December 8, the Department of Education released draft regulations enacted through the Higher Education Act that will help more borrowers get their student loans forgiven. Forgiveness under this plan will be focused on five categories of borrowers:
- Up to $10,000 if the borrower's student loan balance is more than the amount originally borrowed, according to Forbes
- Up to $20,000 if a borrower is enrolled in the SAVE Plan
- Borrowers with federal student loans whose loans first entered repayment 20 to 25 years ago
- Those who qualify for other loan forgiveness programs, like the Public Service Loan Forgiveness program, but have not yet applied
- Former students of colleges and other institutions that engaged in some form of identifiable misconduct, like the Art Institutes
What you need to know:
- There is an “on-ramp” period until September 30, 2024 where borrowers will not be penalized for missed payments. During this period, if you miss payments, your accounts will not go into delinquency and servicers will not report your missed payments to credit bureaus. More information can be found on the US Department of Education website.
- The Education Debt Consumer Assistance Program (EDCAP) created a SAVE IDR Plan Calculator that will help you calculate your accurate monthly student loan payment.
- Federal student loan forgiveness is granted to borrowers who have been in repayment for 20 or 25 years for Direct loans under an income-driven repayment (IDR) plan. The Department of Education will count the 43 months during the pandemic payment pause toward repayment time through the end of 2023, according to Federal Student Aid.
Updated December 5, 2023 2:30pm PST to reflect a new proposal by the Biden Administration.