Federal Student Loan Moratorium Ending Soon: Borrowers Urged to Take Action Now

2023/08/13 11:16

The federal moratorium on student loan repayments and interest will come to an end on August 31, after being extended multiple times due to Covid-19. It is important for borrowers to take action now to avoid confusion and save money, as interest will start accruing on September 1. With up to 30 million borrowers having received a new loan servicer since the start of the moratorium, it is crucial to update contact information and check assigned servicers. Borrowers should also consider reviewing their repayment plan options, including the new SAVE plan, which offers significant savings compared to the previous REPAYE plan. This program offers a lower payment rate of 5% for undergraduate debt borrowers who earn above 225% of the federal poverty line, while those with both undergraduate and graduate debt will pay a blended rate between 5% and 10%. It is important to note that IDR schemes can lengthen the repayment period to up to 20 years before the balance is forgiven, or 25 years for those with graduate school debt. The Biden Administration has launched several relief initiatives for older borrowers, while millions of Gen Zers will be dealing with student loan repayment for the first time. Additionally, there are two new programs that borrowers can pursue through their employers, including a tax provision that allows employers to pay up to $5,250 towards student loans each year without it counting as taxable income, and the option for employers to count student loan payments towards an employer 401(k) match.

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