Americans were excited and incensed when a new one-time student loan debt forgiveness program was announced in August 2022. The provisions of this incredible offer would have forgiven up to $10,000 for borrowers earning less than $125,000 per year, and select others could receive up to $20,000 in debt forgiveness. This would have eliminated $440 billion of student loan debt for about 40 million borrowers.
What happened to student loan debt forgiveness, and what do borrowers have to do now?
The One-Time Student Loan Debt Forgiveness Program is Gone
After numerous debates and legal challenges, the United States Supreme Court ruled against the forgiveness program. They declared that the government had no power to cancel this debt. While the current administration scrambles to find backstopping measures to help with student debt relief, the fact remains that this program was dead before it got out of the gate. Many borrowers had already submitted applications for the program but are now back to facing loads of crippling debt.
Student Loan Repayments Will Resume
With no student loan debt forgiveness in sight, borrowers must start planning to repay their loans. Payments on federal student loans have been frozen since March 2020, thanks to the pandemic, but this ends soon.
Interest begins accruing on loan balances on September 1, 2023, and payments will resume in October. Confusion reigns due to how long loan payments have been paused. Some borrowers may be unclear on how much they still owe, what happened if they continued making payments, and how to start over. Several million borrowers will discover they have a new and different loan servicing company. Borrowers should visit the Federal Student Aid website for news and updates about their accounts.
The government also announced a possible alternative to the abrupt restart of student loan repayments. It is being termed as “a temporary on-ramp” that would allow modified repayments from October 1, 2023 to September 30, 2024. Any missed loan payments during this period will not affect the borrower’s credit rating, and the government will remove the threat of default.
Remember, these provisions are meant to provide relief for those borrowers who took out federal student loans. Private student loans were never slated to be forgiven and must be repaid according to the loan terms. If you need clarification about your loan type, contact your loan servicer or speak with one of our Debt Settlement Attorneys in Davidson County.
Get Help from a Tennessee Debt Settlement Attorney
Do you still need to figure out how to repay your student debt? A Tennessee Debt Settlement Attorney from Fitzgerald & Campbell, APLC in Franklin, can explain your options for handling federal and private student loans in a confidential consultation. The good news is that private student loans issued through Federal Loan Servicers can be resolved just like any other unsecured debt. They can be settled, and the case can be defended if a lawsuit is filed.
Plus, as the federal government investigates other means of student loan debt forgiveness, you may still qualify for other avenues of relief. We can help you determine if you meet the requirements for other relief programs as they arise in the future.
The best time to resolve your student loan debt is right now, before repayments are scheduled to restart in October. To get the best result, partner with a seasoned Tennessee Debt Settlement Attorney from Fitzgerald & Campbell, APLC. We can examine your loan particulars and explain your options in a confidential consultation.
Don’t let student loan debt prevent you from pursuing a career or other lofty goals for your family. We can help you with these and other types of debt settlement issues. Call Fitzgerald & Campbell, APLC, at 615-845-4595 or complete the online contact form requesting a consultation.