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Student loan payments will restart in October

by CoinNews

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Over the three-year-long pause on student loan payments, the U.S. Department of Education has repeatedly told borrowers their bills were set to resume, only to take it back and provide them more time.

This time, however, the agency really means it.

The Education Department posted on its website that “payments will be due starting in October,” and a recent law passed by Congress will make changing that plan difficult.

It will likely be a big adjustment for borrowers when the pandemic-era policy expires. Around 40 million Americans have debt from their education. The typical monthly bill is roughly $350.

“For many borrowers, the payment pause has been life altering — saving many from financial ruin and allowing others to finally get ahead financially,” said Persis Yu, deputy executive director at the Student Borrower Protection Center.

Here’s what to know.

3-year pause saved the average borrower $15,000

As a result of the policy, the average borrower likely saved around $15,000 in student loan payments, Kantrowitz said.

Why the pause will end in the fall

Interest will pick up in September, payments in October

The Education Department says borrowers will be expected to make their first post-pause payment in October. Meanwhile, interest will start accumulating on borrowers’ debt again on Sept. 1, the department says.

Exact due dates will vary based on your account details, Kantrowitz said.

“Your due date will be at least 21 days after you’re sent a loan statement,” he said.

Borrowers don’t know what they’ll owe

Students prepare for loan repayment as the U.S. Supreme Court hears debt forgiveness case

Education Department Undersecretary James Kvaal recently warned that if the administration is unable to deliver on Biden’s loan forgiveness, delinquency and default rates could skyrocket.

The borrowers most in jeopardy of defaulting are those for whom Biden’s policy would have wiped out their balance entirely, Kvaal said.

“Unless the Department is allowed to provide one-time student loan debt relief,” Kvaal said, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”

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