Oct 12, 2023 - News

How student loan repayments will affect D.C. borrowers

Outstanding student loan debt in D.C.
Data: U.S. Department of Education. Table: Axios Visuals

D.C. residents owe nearly $6.5 billion in federal student loans as payments resume this month.

Why it matters: After a more than three-year break, experts warn the return to debt repayment could get messy, and especially squeeze younger borrowers, writes Axios' Kelly Tyko.

By the numbers: D.C. has about 119,000 federal student loan borrowers, the latest data from June shows.

Catch up fast: In July, President Biden announced that some borrowers who have been paying for decades — including 2,230 in D.C. — would have their debt forgiven.

Be smart: Most borrowers will need to opt-in to auto-debit payments before they restart.

Between the lines: There's a 12-month "on ramp" for loan repayments, meaning borrowers who miss payments won't be reported to credit bureaus, placed in default, or referred to debt collection agencies.

  • The on-ramp transition period started on October 1st and runs to September 30th of next year. Borrowers don't have to sign up, according to a White House fact sheet.
  • It goes into effect automatically with a missed payment.
  • Interest will accrue during the period.

Plus: Borrowers can sign up for a new income-driven repayment plan, the SAVE plan, which is estimated to save the typical borrower about $1,000 a year, per the White House.

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