Understanding Biden’s Student Loan ‘On-Ramp’ Period: Safeguarding Borrowers During Payment Resumption
Learn about Biden’s Student Loan ‘On-Ramp’ Period and how it safeguards borrowers during the loan payment resumption this October 1, 2023.
The Features and Impact of Biden’s Student Loan ‘On-Ramp’ Period
Federal student loan payments are set to resume in October, but a 12-month “on-ramp” period will provide some safeguards for borrowers who may struggle to make payments. According to a published article in WHNT, this on-ramp differs from the interest-free pandemic payment pause. While President Joe Biden encourages those who can continue paying their monthly bills, Biden’s Student Loan “On-Ramp” period aims to temporarily protect borrowers from default and credit damage if they miss payments.
Biden’s Student Loan “On-Ramp” period will be automatically in effect from October 1, 2023, to September 30, 2024. During this time, it offers benefits such as preventing loans from falling into delinquency or default, not reporting missed payments to credit bureaus, and avoiding reporting to debt collection agencies. Additionally, unpaid interest won’t be capitalized upon the on-ramp’s expiration. However, drawbacks include accruing interest, payments remaining due after the on-ramp ends, and no progress toward loan forgiveness under income-driven repayment plans or Public Service Loan Forgiveness.
Navigating Biden’s Student Loan ‘On-Ramp’: Who Should Use It and Alternatives to Consider
The Biden’s Student Loan “On-Ramp” period is intended as a safety net for vulnerable borrowers, and experts recommend it as such. Those facing financial hardship, especially recent graduates without a stable income, may find it helpful. However, borrowers who can afford to make payments should plan to do so. Alternatively, there’s a new IDR plan called “Saving on a Valuable Education (SAVE)” for those seeking $0 payments while working toward loan forgiveness.
While some borrowers might be banking on student debt cancellation, the uncertainty around this makes it advisable to start making payments in October. The future of the proposed “Plan B” for student debt cancellation is unclear, and waiting could result in a larger student loan balance when Biden’s Student Loan “On-Ramp” period expires in late 2024.