Page 2 - aruba-today-20241002

A2 UP FRONT
Wednesday 2 OctOber 2024

The grace period for student loan payments is over.

Here’s what you need to know

What if I can’t pay?
Continued from Front If your budget doesn’t al-
low you to resume pay-
Around eight million of ments, it’s important to
those borrowers had en- know how to navigate the
rolled in the SAVE plan, the possibility of default and
newest income-driven re- delinquency on a student
payment plan that extend- loan. Both can hurt your
ed the eligibility for bor- credit rating, which would
rowers to have affordable make you ineligible for ad-
monthly student loan pay- ditional aid.
ments. However, this plan If you’re in a short-term fi-
is currently on hold due to nancial bind, you may
legal challenges. qualify for deferment or
With the on-ramp period forbearance — allowing
and a separate program you to temporarily suspend
known as Fresh Start ending payment.
and the SAVE plan on hold, To determine whether de-
student loan borrowers ferment or forbearance
who are struggling to afford are good options for you,
their monthly payments you can contact your loan
have fewer options, added servicer. One thing to note:
Yu. Student loan borrowers UCLA students celebrate during a commencement ceremony inside Pauley Pavilion on UCLA interest still accrues during
campus, in Los Angeles, June 14, 2024.
who haven’t been able to Associated Press deferment or forbearance.
afford their monthly pay- Both can also impact po-
ments must consider their and then being subject to and eventually default. qualify by visiting the Fed- tential loan forgiveness
options to avoid going into forced collections. Howev- That can badly hurt your eral Student Aid website. If options. Depending on
default. er, if you missed payments, credit rating and make you you’ve worked for a gov- the conditions of your de-
If you have student loans, you still be falling behind ineligible for additional aid ernment agency or a non- ferment or forbearance, it
here’s what you need to ultimately on repaying your and government benefits. profit organization, you may make sense to contin-
know. loans,” said Abby Shaforth, If a borrower missed one could also be eligible for ue paying the interest dur-
What was the on-ramp pe- director of National Con- month’s payment, they will the Public Service Loan For- ing the payment suspen-
riod? sumer Law Center’s Stu- start receiving email no- giveness Program, which sion.
The Education Department dent Loan Borrower Assist- tifications, said Shaforth. forgives student debt after What is an income-driven
implemented this grace ance Project. Once the loan hasn’t been 10 years. repayment plan?
period to ease the borrow- Since this grace period has paid for three months, loan What happens when a loan The U.S. Education Depart-
er’s transition to make pay- ended, student loan bor- servicers notify to the credit goes into default? ment offers several plans for
ments after a three-year rowers who don’t make reporting agencies that When you fall behind on a repaying federal student
payment pause during the payments will go delin- the loan is delinquent, af- loan by 270 days — roughly loans. Under the stand-
COVID-19 pandemic. Dur- quent or, if their loans are fecting your credit history. 9 months — the loan ap- ard plan, borrowers are
ing this year-long period, not paid for nine months, Once the borrower hasn’t pears on your credit report charged a fixed monthly
borrowers were encour- go into default. paid the loan for nine as being in default. amount that ensures all
aged to keep making pay- Borrowers who cannot af- months, the loan goes into Once a loan is in default, their debt will be repaid af-
ments since interest contin- ford to make payments default. it goes into collections. This ter 10 years. But if borrowers
ued to accumulate. can apply for deferment or If you’re struggling to pay, means the government have difficulty paying that
“Normally, loans will de- forbearance, which pause advisers first encourage can garnish wages (with- amount, they can enroll in
fault if you fall about nine payments, though interest you to check if you qualify out a court order) to go one of several plans that
months behind on making continues to accrue. for an income-driven re- towards paying back the offer lower monthly pay-
payments, but during this What happens if I don’t payment plan, which de- loan, intercept tax refunds, ments based on income
on-ramp period, missed make my payments? termines your payments by and seize portions of Social and family size. Those are
payments would not move Borrowers who can’t or looking at your expenses. Security checks and other known as income-driven
people towards defaulting don’t pay risk delinquency You can see whether you benefit payments. repayment plans.q