Though the Biden administration lost its bid for full student loan forgiveness for now, it was able to put several new conditions in place to make student loan repayment more flexible for those who must pick up payments in October.
Over the course of the next year, the program will feature “on-ramping.” This allows borrowers wiggle room if they miss payments or if their financial circumstances have changed. However, missed payments and extra interest will be added to the loan's life.
Borrowers in default before the moratorium will now be considered current in their payments. This means they qualify for repayment plans and other services to ease the financial burden of loan payments. Nevertheless, borrowers will need to contact the Department of Education and enroll in the Fresh Start Program before September 2024.
And there are some borrowers who will have their loans forgiven completely. Approximately 800,000 borrowers’ loans are in the process of being canceled due to lender mistakes in credit or financial advice.
Experts recommend that borrowers with questions or concerns about the status of their loans should contact their lenders for the most relevant and useful information.