Alert! Biden Pause Ending! 5 Tips for Borrowers

 Alert! Biden Pause Ending! 5 Tips for Borrowers

The financial world is abuzz with the news that, after years of student loan debt relief, the initiatives that President Biden had planned to extend will be sunsetting as of this coming October, under political pressure over raising the country’s debt ceiling limit.

The president’s decision to pursue long-term student loan debt relief has had a major positive impact on American individuals and families holding student loan debt, and its end is likely to stress many borrowers.

Since March 2020, those with limited ability to repay loans have had options for dealing with the financial impact of the coronavirus pandemic.

Experts estimate that the student loan debt waiver saves borrowers $5 billion a month in interest, and eases the financial picture for some 40 million borrowers. That’s a lot of people!

When you look at those numbers, you know that it’s going to be a trying and chaotic time when suddenly, old student loan rules snap back into place. But that’s not all – the change takes place in an industry that’s known for its complexity and for fraud and abuse by lenders. People are so used to hearing about shady lender practices that it’s almost a matter of fact sort of thing, and advocacy groups can point to example after example of lenders not playing fair.

In that context, borrowers need all of the help they can get. Here are five things that borrowers can do to help deal with these upcoming changes related to a renewed push to get student loan accounts going again.

Consider the Federal On-Ramp Program

Although the broader student loan debt relief program is ending, borrowers will be able to take advantage of a one-year on-ramp program, in which debt amounts will not be sent to creditors collection agencies.

Check out these other rules related to this important grace period as we move into 2024…

Know Who Holds Your Loan!

This is one of the most understated aspects of a growing student loan crisis, and it’s something that people might not think about until their name is on the borrower line.

Simply put, student loan servicers change all the time in arbitrary ways, much like handlers of other kinds of debt, like mortgages. Nobody really has the borrowers in mind while the paperwork keeps shuffling from one desk to another. Suddenly, your loan servicer is an entirely different company, either because your debt has been sold, or for administrative reason, and the borrower has to scramble to figure out how to pay to a new party.

What people are finding when they investigate the end of the student loan debt relief program is that many millions of borrowers no longer know who holds their loan, because their loan servicer has changed since 2020.

A PBS article provides this phone number for help: 1-800-433-3243. Apparently you can call and figure out who your lender and servicer are. But what about making laws to control arbitrary debt shuffling?

Lenders have to be clear and transparent about individual borrower accounts, and those with oversight need to hold them accountable.

Research Income-Driven Repayment Plans

A federal SAVE program replaces the previous REPAYE or ‘pay as you earn’ model, and some would say the new plan has more teeth in limiting how much of a person’s take-home pay a lender can demand.

The new income-driven repayment plan model indicates that payment amounts should be within 5% to 10% of the borrower’s income.

This makes handling student loan debts much more affordable for many borrowers! Know your rights.

In general, look for the acronym IDR, which stands for income-driven repayment program, and given eligibility, you may find yourself on the right path to cutting your student loan payments down to manageable size.

Evaluate Secondary or Auxiliary Loan Handling Programs

When it comes to student loan deferment, forbearance or forgiveness, there are other smaller programs that complement the greater Biden student loan debt pause. And some of those are still active.

One is a limited PSLF waiver program for public servants that experts estimate has helped 615,000 borrowers.

Other types of student loan accounts are eligible for other deferment or forbearance programs in other ways.

Do the research, and you could be saving very important amounts of money.

Work on the Affordability Angle

Of course, when you’ve already attained a degree, it’s too late to go back and look at what schools are most affordable, or what they charge.

Still, a White House fact sheet shows that the federal government is pursuing making college more affordable with goals like making all community college free, and convincing colleges to keep tuition affordable for students.

“For the most vulnerable borrowers, the effects of debt are even more crushing,” spokespersons write. “Nearly one-third of borrowers have debt but no degree, according to an analysis by the Department of Education of a recent cohort of undergraduates. Many of these students could not complete their degree because the cost of attendance was too high. About 16% of borrowers are in default – including nearly a third of senior citizens with student debt – which can result in the government garnishing a borrower’s wages or lowering a borrower’s credit score.”

Borrowers have the option to defer their loans by going back to school if they are eligible, or applying for loan modifications under other criteria. If your new loan program is more favorable to your bottom line, a return to academia may make sense.

Check out this resource from SoFi, a modern banking company with some helpful tips on handling student loans.

Last but not least, always keep an eye on this site, and others that advocate for student loan borrowers. If your lender is doing something that seems not quite right, let us know, and get representation to make your voice heard! Also check out the web site of the Consumer Finance Protection Bureau or CFPB, which was set up partly to help with student loan problems. And make sure that you know what options are available to you, as a borrower. We want to keep lenders in check, and promote transparency and fairness in this area of finance.