Preparing for the End of an Era (Forbearance)
Biden weirdly is leaning into the Dark Brandon memes, so here we are.
A Brief Timeline of Events
This post originally was titled, “How Student Loan Forgiveness Might Affect Your Credit Score.” As I wrote that post, elated by the news of pending student loan forgiveness and what it would mean for working-class families in America, I thought people would be curious about how it would affect their credit scores. Of course, now here we all are preparing for forbearance to end and payments to resume. In other words, a great trauma has returned to haunt millennials everywhere.
The timeline of events has been a rollercoaster of emotions for many borrowers, and this article needed severe updating to reflect our current reality, so below I am going to put a brief timeline, so we are all on the same page.
March 13th, 2020: Trump Administration sets interest rates on federally held loans to 0% and suspends payments for at least 60 days (pandemic.)
March 27th, 2020: Cares Act pauses payments through September 2020.
August 22nd, 2020: Payment pause extended through December 2020.
December 4th, 2020: Payment pause extended through January 2021 citing HEROES Act.
January 20th, 2021: Biden extends pause through September 2021.
August 6th, 2021: Pause extended to January 2021.
December 22nd, 2021: Extension to May 2022.
April 6th, 2022: Extension through August 2022.
August 24th, 2022: Announcement of broad-based student loan forgiveness, $10,000 per borrower and $20,000 if you went to school on a Pell Grant. “Final” extension to December 31st, 2022.
October 17th, 2022: Online application posted for student loan forgiveness. 26 Million apply. 😥
November 10th, 2022: Federal judge in Texas strikes down forgiveness plan.
November 22nd, 2022: Final extension during the appeal. 60 days after the supreme court case or 60 days after June 30th, 2022.
June 30th, 2023: Supreme Court rejects Biden’s plan.
September 1st, 2023: Interest begins accruing on student loans.
October 2023: First payments post forbearance are due.
Just glancing at the timeline, you can see that it could be animated as a can being kicked down the road for years on end. From a moment of joy in August when I thought of all the people, I worked with at a local credit union that would benefit from the decision to challenges and now repayment.
How this truly unfolds will be interesting. Repayment, possible forgiveness, a debt strike. Only time will really tell and I’m certain that this timeline will shortly become outdated and in need of updating. The original purpose of this post to understand how it will affect your credit score has certainly been scrapped.
Who Has My Loan Now Anyways?
So, it’s time to repay, but you’ve received about 3 different emails that your loans have been sold off during our joyful timeline above. That means new websites to navigate to enter repayment. Had loans with Navient? Go Find Aidvantage now. Great Lakes? We sold them to Nelnet. Here’s the website for you to figure out who to pay if their emails were lost in your inbox somewhere.
What will the Interest Rate be When Repayment Starts?
You will likely have the same interest rate that you did before the pause began. However, it may have changed if you consolidated your loans to qualify for forgiveness. In September you should receive a disclosure and be able to see online what you need to pay and the rate. If you look now, it still says 0% and a note that interest rates are set by Congress.
Applying for Forgiveness on Student Loans:
There are some options for getting your loans forgiven through other methods. Some common methods include public service, a closed school, or death. All the options are listed on this helpful page. If you ever attended a school that was involved in a court case for shady behavior or closed during your program, then you can file a closed school or borrower’s defense (against the dark arts) discharge.
What’s the Future of Student Loan Forgiveness?
Well as we’ve seen from this saga – who knows, but the current broad-based one-time relief project has been replaced with a rework of the income-based repayment program called SAVE. This can be applied for on Studentaid.gov. It is meant to stop low-income borrowers from constantly treading water and one of my favorite features is the suspension on interest while in the payment program. This article covers it well.
How to Pay off Student Loans:
Tired of relying on the supreme court to decide your fate and want to pay off the loans once and for all? A nice taste of freedom awaits you with that last payment, that much is undeniable. I’ve got an in-depth article that goes into the two methods of paying off multiple loans. They are called the Avalanche and Snowball Method, and yes there is cute kobold art in the article.
Dragon Money is Always in Your Corner:
Student loans are a hard topic to talk about. They come with a lot of emotions and shame. Many borrowers took out loans when they were very young with aspirations for the future, and lacked the guidance to navigate financial decisions when they signed on the dotted lines. Perhaps you were a parent just hoping to give your child the best shot they could get in life, and now you face a large burden of repayment.
Stick around and read some more articles. I’ll do my best to keep creating helpful content to support you.
