If you can’t afford to restart payments, you may be eligible for an income-driven repayment plan. 

Students loan forbearance plans that initiated during the early days of the COVID pandemic recently expired. Additionally, the Fresh Start program that allowed borrowers to get out of default expired September 30—and so did its extension to October 2. Here’s what you need to know now.

Student loan relief timeline and why it matters

COVID student loan deferrals started in March 2020 and ended in October 2023. Even though borrowers were required to resume payments last year, the federal government issued a one-year freeze on reporting to credit bureaus. That freeze expired October 1, 2024, and this means student loan creditors are now reporting borrower payments—or lack of payments—to credit bureaus.

If you’ve resumed payments on your student loan(s) and are making them on time, you’re all set. Plus, your payments are helping build your credit score. VantageScore reports resuming on-time payments boosts credit scores by 8 points on average.

If you’re not making payments, lenders will report your account as delinquent. The hit to your credit score will be significant, too. Expect a decrease between 49 and 82 points according to VantageScore.

What if you’re not making loan payments as of October 1, 2024

If you’re having difficulty making student loan payments, ignoring the problem will only make it worse. Lower credit scores make it harder to get credit cards, auto and home loans, and some jobs. Non-payment of loans could even lead to wage garnishments. If your wages are garnished, up to 15% of your disposable income could be taken for loan repayment.

Don’t despair, though!

You may be eligible for an income-driven repayment (IDR) plan. This federal program helps make student loan debt more manageable by restructuring your loan with a monthly payment based on your income and family size. Your payment could be as low as $0. And, after 10 years of monthly payments, the balance of your loan could be eligible for forgiveness. Get more IDR plan details here.

Improve your financial fitness

As a Consumers member, you have access to two free programs that can help you better manage your finances: GreenPath Financial Management Counseling and Credit Smart. See how these credit counseling and repair programs work here. These programs are open to all members, including those with student loans.

 

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