Student-loan borrowers are finding out that restarting a $1.6 trillion federal program is much more confusing than switching it off, the Wall Street Journal reported. With pandemic relief ending, borrowers will start owing interest as of Friday. They are learning of new payment schedules, often via email, from servicers they might have never heard of — and could be reluctant to pay. That is because about four-in-10 borrowers’ loans transferred to a new servicer during the pause that began in March 2020, according to government data. Millions more have graduated or otherwise left school during the pause and have never been required to make a payment until now. And many must consider a flurry of enticing, but novel, Biden administration changes to repayment plans and debt-forgiveness programs. The first payments are due as soon as Oct. 1. Borrowers must work with their servicers and government tools to determine the most beneficial repayment strategy. That includes an income-driven repayment option rolled out by the administration last week that could significantly lower their monthly payments and put them on a path to debt forgiveness after 20 years of compliance. They must also decide whether to make payments at all, or use a 12-month “on-ramp,” during which interest accrues but loans aren’t marked as delinquent or reported to credit-rating companies. The department has sent out early payment reminders via email this summer and is working with servicers to increase individual communications with borrowers, a spokesperson said. After Oct. 1, they will send notices to borrowers who didn’t make their first payment offering additional resources.
