Student loan payments for restart; here’s how to get help | News, Sports, Jobs

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For 42.9 million student loan borrowers, 18 months passed without repayment. It will end in October – ready or not.

The pause in paying off the interest-free federal student loan, known as the deferral, has been extended three times after it originally went into effect in March 2020 to help mitigate the financial shock that many borrowers have experienced as a result of the pandemic.

But with payments due to resume in a few months, service companies – companies that manage student loan payments – are already taking thousands of calls a day from borrowers seeking student loan help, according to Scott Buchanan, executive director of the Service Alliance. student loans is a non-profit trade organization serving student loans.

Service personnel and loan borrowers have less time to prepare for repayment.

Although Education Minister Miguel Cardona indicated that this is not the case. “out of question” to extend the loan deferral beyond September 30, while borrowers must be ready to pay bills sometime in October (they must be notified at least 21 days before the exact billing date).

Talk to your service staff now

Service providers expect that the demand for help from borrowers will increase, and they may find it difficult to cope with it. The repayment system has never been shut down before, so no one is sure what a simultaneous restart would look like for 42.9 million people.

“We have no guidance from the Ministry of (Education) on what the renewal strategy will look like,” Buchanan says. “We are at the time when these plans should be brought to the attention; he cannot wait. “

Richard Cordray, newly appointed head of the Federal Bureau of Student Aid for the Department of Education, told The Washington Post on June 11 that the resumption of payments was “A very difficult situation” and said the office plans to provide more information to service companies soon. He also said the department plans to hold service providers accountable by setting stringent performance criteria.

“Despite the uncertainty, if you’re worried about your ability to make payments, there’s nothing wrong with contacting your service agent now to get out of the rush,” Buchanan says. Ask about the best payment management options based on your situation.

If you are unsure who your service personnel are, please log into your My Federal Student Aid account to find out. To ensure you don’t miss any notices, make sure your contact information is up to date on your lending institution’s website and on your StudentAid.gov profile.

Know your repayment options

“You don’t have a pay-or-default option.” says Megan Kowal, vice president of policy and federal relations with the National Association of Student Financial Aid Administrators. “There are intermediate options for reducing payments. Nobody, including the federal government, wants to see you default. “

The default occurs after about nine months of a federal loan delay. This can lead to a deterioration in your credit rating, withholding wages, withholding tax refunds and other financial burdens.

– If Payments Are Difficult: Participating in an income-driven payment plan sets payments as a portion of your income, which can be $ 0 if you are unemployed or part-time. Or, you can suspend payments (with interest collection) using the unemployment deferral or deferral.

– If you are late in payments before the pause: your loans will be reset to “good position.” Making your monthly payments on time will help you maintain this status. But if you think you might be missing out on a payment, or don’t think you can afford payments at all, talk to your support staff about enrolling in an income-driven plan.

– If you defaulted before the break: Contact the loan holder or the Education Department’s default settlement team to learn how to begin loan rehabilitation and restore a good reputation.

Find a legitimate resource

Service providers may be your first point of contact, but not necessarily the last. You may have other needs that your service staff cannot meet, such as financial hardship besides student loans or legal advice.

Non-cash borrowers can get free legal student loan assistance from organizations such as The Institute of Student Loan Advisors. Other student loan assistance such as a loan counselor or lawyer will charge a fee. You can find reputable credit counselors at organizations such as the National Credit Counseling Fund.

Financial planners can also help, but it is best to look for someone with experience with student loans, such as a certified student loan specialist.

You can get legal assistance, including advice on debt settlement and bankruptcy, from lawyers who specialize in student loans, or legal services in your state listed by the National Consumer Law Center.

If your problem is with service personnel, contact the Federal Student Loan Ombudsman Group, which resolves federal student aid disputes. You can also file a complaint with the Federal Student Aid Feedback Center or the Consumer Financial Protection Bureau.

Avoid scammers

Legitimate student loan aid organizations will not seek you out with offers of debt resolution through unsolicited text messages, emails, or phone calls. Most importantly, you don’t have to pay anyone to apply for debt consolidation, enter into an income-based repayment plan, or apply for a government service loan forgiveness.

“The hard-and-fast rule is that it is free to apply for (consolidation and redemption) programs,” says Kira Taylor, a staff attorney specializing in student loans at the National Center for Consumer Law. “I think when people understand what they can do for free, it becomes easier for them to detect fraud.”

And don’t fall for any companies promising to forgive your student loans or waiting for the government to do so – so far, no executive action by President Joe Biden or Congressional legislation has happened.

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