By: d-mars.com
News Provider
Congress banned more extensions of the student loan payment pauses under the CARES Act in June, which means interest will begin accruing again on billions of dollars of student loan debt for Texans today.
Texans had the second largest amount of total student loan debt in the country, owing $127.3 billion, after California’s $149.7 billion. On average, Texans owed $33,400 in student loan debt, which ranked 37th among U.S. states and territories.
A Department of Education review concluded that nearly 64,000 Texans would have their student debt canceled after issues with income-driven repayment plans failed to move them closer to loan forgiveness goals.
The National Picture
Student debt, which includes federal and private loans, was $1.75 trillion dollars as of June 2023. Public university student debt made up 44% of the federal debt.
Defaulting & Delinquency
If a student loan remains delinquent for 90 days, the loan servicer will report the default to the three major credit bureaus, which can impact the borrower’s credit score and have far-reaching consequences.
The department reported no new direct loan borrowers entering default since March 2020, but experts expect that many borrowers will struggle once payments resume given the number of borrowers having a hard time before the pause.
Missing Payments
The Biden administration has included a 12-month “on-ramp” period for borrowers who miss monthly payments. However, interest will continue to accrue during the grace period.
Repayment Preparation
In October 2023, 44 million borrowers will have their student loan payments resume after being paused since March 2020. They should update their contact information with their Financial Aid office and their loan service provider.
The Biden administration’s Saving on a Valuable Education plan (SAVE) will cut payments in half compared to other income-driven repayment plans once it goes into full effect. The Department of Education’s website offers several tools to help borrowers, including a loan simulator.
