{"id":16301,"date":"2025-06-06T20:04:26","date_gmt":"2025-06-06T20:04:26","guid":{"rendered":"https:\/\/finderica.com\/?p=16301"},"modified":"2025-06-06T20:04:26","modified_gmt":"2025-06-06T20:04:26","slug":"behind-on-student-loan-payments-act-now-as-5-million-summer-defaults-loom","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=16301","title":{"rendered":"Behind on Student Loan Payments? Act Now as 5 Million Summer Defaults Loom"},"content":{"rendered":"
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If you\u2019re among the millions of borrowers who haven\u2019t made full, on-time federal student loan payments after the <\/span>on-ramp period<\/span> ended Sept. 30, 2024, take action now. Otherwise, your loans may default in July or August. <\/span><\/p>\n<\/div>\n

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Once a borrower\u2019s payments are 270 days past due, their <\/span>student loans default<\/span>. That status can bring serious consequences, including wage garnishment, damaged credit and lost access to affordable repayment plans.<\/span><\/p>\n<\/div>\n

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Nearly 5.6 million borrowers were between 91 and 180 days behind on their payments as of March 31, per Department of Education data. That means they\u2019re at immediate risk of defaulting this summer. These are borrowers who were in good standing before the pandemic but who haven\u2019t gotten back on track since payments resumed. <\/span><\/p>\n<\/div>\n

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Five million student loan borrowers already faced <\/span>default penalties in May<\/span>. Those borrowers were in default prior to the pandemic.<\/span><\/p>\n<\/div>\n

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As a result, a total of 10 million borrowers \u2014 about one in four \u2014 could be in default this summer, the Education Department says. <\/span><\/p>\n<\/div>\n

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With essential costs rising and an increasingly complicated repayment system, many borrowers are finding it difficult to restart student loan payments, says Kyra Taylor, a staff attorney focused on student debt at the National Consumer Law Center. \u201cRight now, it is deeply confusing for borrowers what options they have.\u201d<\/span><\/p>\n<\/div>\n

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The good news: You still have time to avert default and get assistance. You may be able to lower your monthly payment to as little as $0 or pause payments entirely while you find your financial footing.<\/span><\/p>\n<\/div>\n

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If you’re in a deferment, forbearance or enrolled in the SAVE plan, you may already be protected from default \u2014 but it\u2019s critical to confirm your status with your loan servicer. <\/span><\/p>\n<\/div>\n

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In this unsteady time for borrowers, here\u2019s what you can do. <\/span><\/p>\n<\/div>\n

Check all of your student loan accounts<\/span><\/h2>\n
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Your first step: Log into all of your federal student loan accounts. Start with your <\/span>studentaid.gov<\/span><\/a> account, which includes information about your loan history and the name of your <\/span>student loan servicer<\/span>. Your servicer may have changed since you last made a payment, or you might have more than one servicer \u2014 even for loans taken during the same period.<\/span><\/p>\n<\/div>\n

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Borrowers with multiple servicers might be up to date with payments through one servicer, but in default with the other servicer without knowing it, Taylor explains. <\/span><\/p>\n<\/div>\n

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Once you\u2019ve identified your servicer(s), log into your servicer account(s). Here, you can confirm your loan repayment status and the last time you made a payment. <\/span><\/p>\n<\/div>\n

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If you’re delinquent, your servicer should be reaching out to you directly, too \u2014 as long as your contact information is up to date in your account.<\/span><\/p>\n<\/div>\n

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Servicers start contacting delinquent borrowers by phone, email and mail after 30 days of missed payments, says Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade association for federal servicers. By the time a borrower is 270 days behind, they should have received dozens of servicer calls, he says. <\/span><\/p>\n<\/div>\n

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Not sure if those calls are coming from your servicer or a <\/span>student loan scammer<\/span>? Hang up, find your servicer\u2019s official phone number, and call your servicer back directly, Buchanan advises. <\/span><\/p>\n<\/div>\n

Learn your options for averting default <\/span><\/h2>\n
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You must act quickly to avoid default \u2014 but that doesn\u2019t mean you have to start immediately making expensive payments. You have a variety of options to get your loans back into good standing, including formally pausing payments or getting lower bills based on your income. <\/span><\/p>\n<\/div>\n

Sign up for an income-driven or alternative repayment plan <\/span><\/h3>\n
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You can choose from three different <\/span>income-driven repayment (IDR) plans<\/span>, which cap monthly payments at a certain percentage of your income. Your bill could be $0 if you\u2019re unemployed or earn a very low income. <\/span><\/p>\n<\/div>\n

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Each IDR plan has slightly different eligibility rules and repayment terms \u2014 but for many struggling borrowers, they will reduce payments compared to the standard repayment plan, Taylor says.<\/span><\/p>\n<\/div>\n

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Use the Education Department\u2019s <\/span>loan simulator<\/span><\/a> to gauge payments under different plans, and apply through studentaid.gov\/IDR or by contacting your federal student loan servicer. It might take a while before your IDR application is processed: There\u2019s a backlog of 2 million applications, according to a May 15 <\/span>court filing<\/span><\/a>.<\/span><\/p>\n<\/div>\n

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When you apply to an IDR plan, check that your servicer places you in a \u201cprocessing forbearance\u201d status, which prevents you from defaulting while you’re waiting for your application to clear, Buchanan says. That status also temporarily pauses payments until you\u2019re approved for the IDR plan.<\/span><\/p>\n<\/div>\n

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Besides IDR, two other alternative <\/span>repayment plans<\/span> \u2014 the extended or graduated repayment plans \u2014 may also lower your payments. Or, you can <\/span>consolidate your student loans<\/span> to extend the repayment period and reduce monthly bills, Buchanan says. Your servicer can help you navigate these options. <\/span><\/p>\n<\/div>\n

Get temporary relief with a forbearance or deferment<\/span><\/h3>\n
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For some borrowers, payments will still be too high under an income-driven repayment plan. <\/span><\/p>\n<\/div>\n

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If you\u2019re in that situation, call your servicer and explain why your payments are unaffordable. Mention medical debt, housing costs, child care and other circumstances, Taylor says. You may qualify for a <\/span>forbearance or deferment<\/span>.<\/span><\/p>\n<\/div>\n

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The downside is that interest may continue to accrue on those loans while they’re in forbearance or deferment, increasing the amount you\u2019ll eventually owe. <\/span><\/p>\n<\/div>\n

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But these options can prevent you from defaulting \u2014 and they will \u201cbuy the borrower some time to rework their budget, to try to start making payments again in the interim, and to work to get over whatever has created a hardship for them,\u201d Taylor says. <\/span><\/p>\n<\/div>\n

Give less likely options a shot<\/span><\/h3>\n
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If you’re able to make a lump sum payment to catch up on past-due bills, that could bring your loans back into good standing.<\/span><\/p>\n<\/div>\n

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Or check if you qualify for a <\/span>federal loan discharge program<\/span>. Those programs may be applicable if your school misled or defrauded you, or if it closed and left you unable to finish your degree program. <\/span><\/p>\n<\/div>\n

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Another program, total and permanent disability discharge, may be relevant if you have a physical or mental health condition that prevents you from working.<\/span><\/p>\n<\/div>\n

SAVE borrowers aren\u2019t on track to default<\/span><\/h2>\n
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The 7.8 million borrowers enrolled in the SAVE repayment plan haven\u2019t had to make payments since last summer. That\u2019s because they\u2019ve been placed in an interest-free forbearance while <\/span>legal challenges against SAVE<\/span> play out.<\/span><\/p>\n<\/div>\n

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Being in forbearance can protect you from default, so SAVE borrowers aren\u2019t at risk \u2014 even if they haven\u2019t made payments since the on-ramp ended.<\/span><\/p>\n<\/div>\n

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Still, it\u2019s a good idea to double-check your status by calling your servicer. If you think you\u2019re in forbearance but aren\u2019t, you could be at risk of default without realizing it.<\/span><\/p>\n<\/div>\n

You don\u2019t have to navigate this alone<\/span><\/h2>\n
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The studentaid.gov website has useful information on repayment plans and ongoing litigation impacting student loan borrowers, Taylor says. Researching your options can also help you feel confident when you <\/span>call your student loan servicer<\/span>, and make sure the information you\u2019re getting is correct. <\/span><\/p>\n<\/div>\n

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When you call your servicer, ask specific questions about your situation, and ask them to walk you through your options to get back into good standing. Borrowers can also use their servicer\u2019s website to accomplish most general tasks, Buchanan says. <\/span><\/p>\n<\/div>\n<\/div>\n

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If you\u2019re among the millions of borrowers who haven\u2019t made full, on-time federal student loan payments after the on-ramp period ended Sept. 30, 2024, take action now. Otherwise, your loans may default in July or August. Once a borrower\u2019s payments are 270 days past due, their student loans default. That status can bring serious consequences,<\/p>\n","protected":false},"author":1,"featured_media":16302,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[195],"tags":[626,4809,240,2060,156,474,308,376],"class_list":{"0":"post-16301","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-act","9":"tag-defaults","10":"tag-loan","11":"tag-loom","12":"tag-million","13":"tag-payments","14":"tag-student","15":"tag-summer"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/16301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16301"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/16301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/16302"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}