How student loan repayments will affect D.C. borrowers
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.
- They owe nearly $54,500 on average, well above the national average of $37,300, per the Education Data Initiative.
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.
- Last week, Biden added $9 billion of student loan forgiveness through "fixes" to its debt relief programs, helping 125,000 borrowers across the country.
Be smart: Most borrowers will need to opt-in to auto-debit payments before they restart.
- Use this Axios explainer to figure out your student loan status.
- Borrowers can also calculate their repayment with Federal Student Aid's loan simulator.
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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