As of October 1, 2024, the period of special protections has ended and borrowers with federal student loans are now expected to repay according to the original terms of their loans. This means collection activity will occur if borrowers do not pay. Ignoring this obligation can have long-lasting and very adverse effects. Borrowers seeking federal repayment options can learn more on the Federal Student Aid website. A recent article from Forbes regarding changes to federal loan repayment can be found here.
Key Changes: Effective October 1, 2024
- End of the On-Ramp Program: The On-Ramp Program provided temporary protections to federal borrowers who were struggling to make payments. Enrollment ended on September 30, 2024. This program allowed borrowers to avoid negative credit reporting for missed payments by placing them into retroactive forbearance. Effective October 1, borrowers will need to start making payments again or potentially face negative consequences including defaults, late fees, negative credit reporting, tax liens, wage garnishments, etc.
- End of the Fresh Start Program: Enrollment for The Fresh Start initiative ended on September 30, 2024. This program was for federal borrowers in default before the COVID-19 pandemic. It offered special benefits, such as restoring access to federal student loans and grants to borrowers who had missed payments for at least 270 days, allowing them to remain in good standing and avoid collection actions.
Guidance for Financial Preparedness
- Review Your Repayment Options:
- Take the time to understand your repayment plans.
- If you’re facing challenges, consider income-driven repayment (IDR) options that adjust your monthly payments based on your income and family size. Learn more about IDR options on the Federal Student Aid website.
- Communicate with Loan Servicers:
- If you are experiencing a hardship and anticipate difficulty making payments, reach out to your loan servicer as soon as possible to discuss deferment or forbearance options.
- Find your Loan Servicer.
- Learn more about loan deferment and forbearance here.
- Stay Informed:
- Keep updated with the U.S. Department of Education’s website regarding changes to student loan policies and repayment options by visiting the U.S. Department of Education website.
Scholarship Foundation interest-free loans are not federally backed, and these changes do not pertain to Foundation loans. However, The Scholarship Foundation prioritizes financial well-being and is committed to providing guidance and resources to borrowers who are encountering difficulty repaying their federal loans or require assistance navigating these changes. For questions or support, contact Terri Cole-Brown, Repayment Manager, at The Scholarship Foundation at (314) 932-6929 or terri@sfstl.org.
