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Student loan repayments will restart soon. What happens if you don't pay?

Student loan repayments will restart soon. What happens if you don't pay?

September 14, 2023

For more than three years, people with student loans haven't had to repay their debt, thanks to a pandemic-era break that is slated to come to an end in October, when repayments resume. But some borrowers say they aren't financially prepared to restart payments, while others may simply be unaware that repayments are due. 

That raises the question of what happens to borrowers if they don't resume paying their loan balances in October. While the answer is complicated, many borrowers may be able to skip repaying their loans without serious consequences — at least for a while — experts say.

The reason? The Biden Administration is creating what it calls an "on-ramp" for student loan repayments that is aimed at easing the financial pain for the nation's 44 million borrowers. The on-ramp, announced on June 30 after the Supreme Court blocked President Joe Biden's student-debt forgiveness program, will give borrowers a one-year grace period for missed payments.

"It's critically necessary that we have some kind of, like, reprieve for borrowers because the reality is that most Americans' budgets don't have the flexibility to suddenly be making what is often hundreds of dollars of monthly payments right now," noted Persis Yu, deputy executive director at the advocacy group Student Borrower Protection Center.

Only 30% of borrowers know when their payments are slated to resume, while almost half said they aren't financially prepared to begin repaying their debt, according to a recent survey from U.S. News & World Report.