COLLEGE AND LOANS

Amidst Student Loan Chaos, Key Protection for Borrowers Ends

By: Phoebe Kranefuss · November 08, 2024 · Reading Time: 2 minutes

People with federal student loans have been on a wild ride this year. Their debts have ping-ponged through court cases, government relief programs, and court rulings that block those programs. All of that drama may have obscured an important but crucial change that happened this fall.

Since last year, the government has protected federal student loan borrowers from the most severe penalties for missing a payment. But on September 30, 2024, that period of leniency – referred to as the “on-ramp” – ended. Now, borrowers who miss payments will once again be subject to pretty serious consequences.

A quick recap: In March 2020, as COVID enveloped the world, the Department of Education allowed federal student loan borrowers to temporarily stop making payments on loans without incurring penalties. In September 2023, the Biden administration ended this moratorium and instituted a year-long on-ramp to ease borrowers back into making payments. During that period, borrowers who paid late or missed payments were excused from the harshest penalties. But that’s no longer the case – and the consequences for missed and late payments are quite serious.

They include fees and penalties, and reports to the big credit reporting bureaus, which can damage your credit score. And, significantly, missing a payment can now forfeit your eligibility for future student aid or forgiveness.

So what? Federal loan borrowers have options. A variety of repayment plans can reduce your monthly bill. Refinancing can lower your interest rate and monthly payment (and SoFi can help with that). And forbearance may offer a temporary pause or more manageable payment. Check out our report, The Cost of Inaction (linked below) to learn more about how to protect yourself now that the on-ramp is behind us.

Related Reading

•   The Cost of Inaction: How to Protect Yourself When the Student Loan Repayment “On-Ramp” Ends in September 2024

•   Missed Student Loan Payments Will Hurt Your Credit Again. What to Know.

•   Will Employers Opt to Help Workers Pay Down Student Loans?

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

OTM20241108SW

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status and and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, years of professional experience, income, and a variety of other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp. or an affiliate, NMLS # 1121636. (www.nmlsconsumeraccess.org)

✝︎ To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2024 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender