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Source: The College Investor
- The enrollment period for student loans is scheduled to end on September 30, 2024.
- Borrowers who fail to make their payments may face negative credit reports, penalties, and the risk of default.
- Legal challenges to other student loan plans increase uncertainty for borrowers.
The on-ramp program for student loans is scheduled to end on September 30, 2024. That will be 12 months since repayments resumed after the Covid-19 pause.
The student loan launch was marked by several key features designed to protect borrowers who may struggle to get back on their feet financially after the pandemic. These programs included not reporting late or missed payments to the credit bureaus, pausing student loan collections (including wage garnishments and tax breaks), and allowing borrowers to get back on their feet with the Fresh Start program.
All of these protections end in September 2024, a period that is destined for chaos for borrowers as lawsuits block key income-based repayment plans and debt relief programs.
“Restart” initiative
The end of the student loan upgrade program is closely linked to the expiration of the Fresh Start initiative, another aid measure of the Biden administration.
Fresh Start has provided comprehensive protections for borrowers who are already in default, including protection from debt collection and the opportunity to get back in good standing. According to the Department of Education, about 7.5 million borrowers were in default or delinquent at the start of the pandemic.
To qualify for Fresh Start, borrowers must contact their lender and begin the process of rehabilitating their loans.
With the Fresh Start program also set to expire on September 30, delinquent borrowers could once again face aggressive government collection tactics, including wage garnishment and confiscation of tax refunds or benefits.
Uncertainty about student loans
The end of the student loan grace period comes as other student loan relief efforts remain in legal limbo. The Biden administration's SAVE plan, which offers lower monthly payments and paths to debt repayment, has been blocked by legal challenges from Republican-led states.
These legal challenges resulted in the suspension of loan forgiveness, loan consolidation and income-based repayment plans.
Given the ongoing chaos in the student loan system, advocacy groups have called on the government to extend the on-ramp program or suspend student loan repayments altogether.
So far, there is no indication from the government that it plans to extend the payment deferral or Fresh Start programs.
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