ED: Delinquent Payments on Federal Student Loans Will Not Be Reported Until January
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) published a blog post on Wednesday that provided an update on the return to student loan repayment, and confirmed that it will begin reporting late or missing payments for most federal student loan borrowers to national credit reporting agencies in January 2025.
The COVID-19 payment pause on federal student loans officially ended last year, with most borrowers having their first payment due in October 2023. To help ease borrowers into repaying their student loans, ED created a temporary 12-month “on-ramp” to repayment where interest would still accrue on student loan balances, but a borrower would not enter into default status if they missed a payment.
This month, the 12-month “on-ramp” to repayment period officially ended. On Wednesday, ED confirmed that the department is required to report late or missing payments for most borrowers to the national credit reporting agencies in January 2025, and those borrowers will enter default, which will lead to mandatory collections and other consequences in “late 2025.” For most borrowers, delinquent payments will not be reported until “early January 2025 at the soonest,” ED wrote.
ED noted that several lawsuits have affected multiple student loan repayment plans, including the Saving on a Valuable Education (SAVE) repayment plan.
“Borrowers now have only three months until they face consequences for late payments – making our work to support student borrowers and reform the broken student loan system more important than ever,” ED wrote in the blog post. “... The department remains committed to providing support and resources to borrowers affected by these recent changes, particularly those who may still be struggling to pay back their loans.”
NASFAA recently shared a list of best practices for institutions to help them inform borrowers of the recent changes and necessary steps to a satisfactory loan repayment history, and published a deep dive into the Biden administration's efforts on student debt relief.
“As the government sunsets these safety nets, it’s especially critical that the department conduct direct outreach to these borrowers to explain the current status of the income-driven repayment (IDR) plans,” Karen McCarthy, NASFAA vice president of public policy and federal relations, said in a previous statement. “Recent court challenges to the Saving on a Valuable Education (SAVE) plan has left borrowers confused about whether these plans are still an option, how to apply for them, and what happens after they apply.”
Publication Date: 10/11/2024
Alexandria J | 10/11/2024 11:2:17 AM
These lawsuits are ridiculous and are preventing borrowers from paying because they are afraid of a 'bait and switch', and rightfully so! SAVE has so many more benefits than the forgiveness aspect, so remove it if that's what they're crying about and move forward. Servicers can't keep up with the short forbearances and everyone is frustrated.
You must be logged in to comment on this page.