Here’s what student loan borrowers need to know about the 12-month ‘on-ramp’ period

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Federal student loan bills resumed this month after a pause of more than three years. Yet, some borrowers may not plan on making a payment for some time.

That’s because the Biden administration has announced a 12-month “on-ramp” to repayment, during which borrowers will be shielded from most of the consequences of falling behind. The relief period is set to expire Sept. 30, 2024.

Here’s what you should know about the program

Do I have to do anything to apply for the relief?

Borrowers do not need to enroll in the on-ramp period, the U.S. Department of Education says.

If your loans were eligible for the pandemic-era payment pause, which mainly include those in the Direct program, then they’ll also qualify for this grace period of sorts.

Loans that don’t qualify include private student loans and commercially held Federal Family Education Loans

Will interest continue to accrue on my debt?

Yes. Interest began accruing on federal student loans Sept. 1.

Unlike during the pandemic-era pause on federal student loans, when interest rates were set to zero, your debt will continue to grow at its pre-Covid rate over the next year. Forgoing payments or making only partial payments during the on-ramp period means you’ll likely have a larger bill in a year.

For that reason, Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said he hoped borrowers weren’t thinking this is just another payment pause.

“There is a fundamental difference here, which is that interest is accruing now,” Buchanan said.

Are there any consequences to not making payments?

Besides the accrual of interest, experts say there are unlikely to be consequences of not making payments during the on-ramp period. However, like with all things student loans, it’s good be careful. One borrower already told CNBC her account was put into a past-due status when she didn’t make her October payment.


Still, the Department of Education says it will not report your missed payments during this period to the credit bureaus.

Borrowers should also be shielded from collection activity, including the garnishments of their wages or retirement benefits, said higher education expert Mark Kantrowitz.

Should I make payments or not?

If you can afford to make your student loan payments, most experts recommend that you do so to avoid ending up with a larger bill when the on-ramp period ends.

Still, experts say some borrowers with small debt balances who believe they will qualify for President Joe Biden’s Plan B for student loan forgiveness are taking their chances and holding off on making their payments.

“They’re trying to buy themselves time,” said Braxton Brewington, press secretary for the Debt Collective.

Biden’s plan is currently working its way through the regulatory process. It is unclear if the administration’s second attempt at providing people relief will end any differently than its first, with a failure at the Supreme Court.

Other borrowers may want to take advantage of the on-ramp period until the Biden administration’s new repayment plan is fully implemented in the summer.

At that point, many borrowers will see their monthly payments fall 50%.

What if my servicer gets it wrong?

What if my servicer gets it wrong?

The restart of student loan payments is proving rocky for many. Borrowers describe incredibly long wait times trying to contact their servicers and receiving incorrect bills.

One customer service representative at a servicer told a borrower they hadn’t even heard of the on-ramp period, Brewington said.

If you feel you’re facing a consequence for a missed payment that you shouldn’t be, Kantrowitz recommends reaching out to the Federal Student Aid Ombudsman.

Borrowers can also see if they qualify for existing forbearance options.


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