As Federal Student Loan Repayments Resume, Tips to Prepare
Friday, August 11, 2023
As summer comes to an end, kids and adults alike are headed back to school. But for college graduates, this also means it's time to resume payments on their federal student loans after a hiatus of more than three years.
More than half of North Carolina college graduates have some student-loan debt, and starting Sept. 1, interest will begin accruing on their federal loan debt, with payments due again in October.
Brian Walsh, associate manager of financial planning for SoFi, a personal-finance company, said there are steps borrowers can take before that date to get prepared.
"Number one, it's really important to take a step back and understand what federal student loans you have," he said. "So, you could do that by going to studentaid.gov and find information on your federal student loans, what types they are, the balances, interest rates."
Walsh said you should also research whether there are loan-forgiveness options available. The Institute for College Access and Success found that in the year before the pandemic, the average college loan debt for a North Carolina graduate was nearly $30,000.
The Consumer Financial Protection Bureau added that 30 million borrowers will have a new loan servicer when payments resume. Walsh said this also means scams will be more prevalent, and warned borrowers to verify the legitimacy of any student-loan communication.
"One of the first places to start is by, if you have a federal student loan, connecting with your servicer," he said, "because over the last three-and-a-half years, not only have payments and interest on federal student loans been paused, but there's been a ton of turnover as far as loan servicers."
He explained that a loan servicer can discuss repayment options that can help borrowers avoid financial hardship. He highlighted the new income-driven repayment option introduced by the Biden administration, and said the plan is generous compared with previous options, and may benefit a majority of student borrowers.
Support for this reporting was provided by Lumina Foundation.
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