August 16, 2023

Navigating the End of the Federal Moratorium: What Borrowers Need to Know Now

The clock is ticking. After a series of extensions due to Covid-19 relief measures, the federal moratorium on the massive $1.6 trillion student loan debt is set to lapse on August 31, 2023. This temporary halt, which began in March 2020, brought a brief respite to the 44 million Americans owing this debt. With interest slated to start accumulating from September 1, borrowers must brace themselves and act promptly.

A noteworthy point of confusion stems from the servicing of loans. During the moratorium, nearly 30 million borrowers have been transitioned to new loan servicers. Couple that with the frequent relocations younger demographics make, there’s a palpable chance your loan servicer may not possess your updated address. To streamline this, borrowers should visit the Department of Education’s to update contact details. Ensuring your loan servicer has accurate, up-to-date information can save you from future complications.

Moreover, borrowers should take proactive steps to get their repayment mechanisms in place. Those who had previously set up automatic deductions from their checking accounts will need to reinstate this feature. If you’re pursuing the Public Service Loan Forgiveness, aim to confirm your eligible job status before year-end. Being proactive could lead to substantial savings, especially if you aren’t currently enlisted in the optimal repayment plan for your circumstances.

The diverse range of federal repayment strategies, including the recently introduced SAVE plan, might be overwhelming, but it’s crucial to find one that suits your financial landscape. The SAVE plan, an improvement upon its predecessor, the REPAYE plan, brings several benefits for borrowers, especially in how payments are calculated based on income. But remember, while plans like SAVE may offer lowered monthly payments, they might extend your loan term, affecting your long-term financial strategy.

The shift towards repayment, especially after the moratorium, can be daunting, especially for recent graduates. Yet, amidst the intricacies, there’s hope in the form of relief initiatives and employer-backed programs. Exploring these opportunities, like employer contributions to student loans or potential 401(k) matches equivalent to loan payments, can offer considerable relief. As the end of the moratorium looms, it’s crucial for borrowers to educate themselves, align with the changes, and make informed decisions to navigate this financial landscape.