What Pennsylvanians should know about student loan payments resuming
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The long pause on federal student loan repayments will end in the fall.
Why it matters: Millions of U.S. borrowers will soon be burdened with monthly payments of approximately $200-$400 or risk going into default, per Markets Insider.
What's happening: Borrowers must start repaying federal student loans in October for the first time since March 2020.
- That comes after the Supreme Court struck down President Biden's loan forgiveness plan last week.
What that means: Interest will start accruing on loans Sept. 1.
- Of note: After that, borrowers who miss a payment won't receive a negative credit report or have their loan sent to a collection agency for a period of 12 months, per the U.S. Department of Education.
By the numbers: More than 1.8 million Pennsylvanians have federal student loans, totaling nearly $67 billion, government data shows.
- They're part of the 43.6 million borrowers nationwide.
Be smart: Most borrowers will need to confirm their auto-debit payments in order to restart them, Axios' Sareen Habeshian writes.
- The interest rate for many borrowers will be the same as it was before the pause on payments.
- Borrowers can log on to the Education Department's website, studentaid.gov, to make sure their contact information is up to date to avoid missing billing statements.
Plus: Some borrowers can get a lower monthly payment by applying for an Income-Driven Repayment Plan (IDR).
- The SAVE Plan, a new IDR, will launch this summer and will exclude spousal income for borrowers who are married and file separately, and increase income exemptions for those near the poverty line.
What's next: The Biden administration is working on a new loan forgiveness plan for "working and middle-class borrowers" but no timeline is set for when the program will be in place, per the Department of Education.