The Biden administration’s era of federal student loan relief has officially ended. This change not only impacts loan forgiveness but also how payments will be managed moving forward.
Currently, over 900,000 people in Arizona alone are dealing with federal student loans, with a total debt of $32.2 billion, according to the U.S. Department of Education.
Changes in Federal Student Loan Relief Policies
During President Biden’s time in office, he focused on providing relief to federal student loan borrowers. This included temporary pauses on payments and interest, along with loan forgiveness for some borrowers. However, this relief is now over. Going forward, student loan borrowers will face stricter rules on payments, and missed payments will affect credit scores.
Jack Wallace, an expert from Yrefy, a private student loan company in Phoenix, warned that people should be ready for these changes. “Remember, it’s a loan, not a gift,” Wallace said. “Under Biden, there were attempts at forgiveness, and while some were successful, others faced legal roadblocks.”
What Will Change Under the New Administration?
Under the new administration, the rules surrounding student loans will be different. Borrowers can no longer count on forgiveness programs that were offered in the past. One significant change is that missed or late payments will now show up on borrowers’ credit reports, which could lower credit scores and impact their ability to borrow money in the future.
“It’s important to make sure your payments are on time,” Wallace added. “Not just to avoid penalties, but also to protect your credit score, which could affect future purchases like cars or homes.”
Options for Borrowers to Lower Payments
Despite the end of the Biden-era relief, there are still options for borrowers who need help managing their student loan payments.
Wallace suggests looking at options available on the official government website, Studentaid.gov. Some borrowers may qualify for income-driven repayment plans, which can reduce monthly payments based on income. Additionally, those working in the public sector or for nonprofit organizations might still qualify for the Public Service Loan Forgiveness (PSLF) program.
“There are ways to lower payments if you’re struggling. Make sure to check the income-driven repayment programs or explore the PSLF program if you work in a nonprofit or government job,” Wallace recommended.
Refinancing for Private Student Loan Borrowers
For people with private student loans, there is still hope for lower payments through refinancing. About 7% of borrowers in Arizona have both federal and private loans. Wallace suggests borrowers reach out to their private lenders to inquire about refinancing options or other ways to manage their payments.
Final Advice for Student Loan Borrowers
Even though the federal student loan relief policies have changed, borrowers still have options available to manage their debt. It’s important to stay informed and take action to protect your credit and reduce monthly payments.
For those struggling, refinancing and looking into income-driven repayment plans are viable options. Always remember to check your eligibility for federal forgiveness programs, especially if you work in the public sector or for a nonprofit organization.
By staying proactive and informed, borrowers can navigate these changes and find ways to manage their student loan debt effectively.
(Source : azfamily.com)
