Student loan holders holding back on repayments, study finds
NYFed: Americans hold $1.59 trillion in student debt
(InvestigateTV) — According to a NerdWallet study, nearly one in three student loan borrowers have slowed their repayment because they are hoping to get some kind of student loan forgiveness.
Even more striking, they found that roughly one in four borrowers have stopped paying their student loans altogether.
Kate Wood, a loan expert at NerdWallet, said right now there are many borrowers who are on administrative forbearance, particularly those enrolled in the SAVE Repayment Plan.
Wood said many people stopped paying during the pandemic when student loans were on hold. This year is the on-ramp back into payments which means interest is still accruing but borrowers will not take a credit score hit for non-payment.
“That on ramp ends September 30 though,” Wood explained. “So, if you are not repaying now, you are going to need to figure out what you need to do to get those bills going again because after September 30 failure to repay your student loans will be reported to the credit bureaus.”
She said student loan defaults can really mess up your finances.
“This sounds pretty basic but something that’s a really important step for borrowers to take is to head to studentaid.gov and also go to your loan servicers websites and just make sure all of your contact information is accurate and up to date,” she urged.
Wood said as these programs are changing and as these lawsuits are going through the courts, the education department or loan servicers may be looking to get in touch with borrowers and send updates, which are important to receive.
For those coming off the student loan on-ramp who simply cannot make loan payments right now, Wood said they should check into deferment or forbearance options, which will help pause payments without having a negative impact on credit reports.
Copyright 2024 Gray Media Group, Inc. All rights reserved.
