Apparently the servicers are having an incredibly difficult time processing the millions of loans they received and because of that, they are placing people on 'administrative forbearance' until they get their stuff together. This is especially true for people who were on REPAYE and are now being switched to SAVE.
You don't get reported when you're in forbearance. During the on-ramp period (through Sept. 30, 2024), we automatically put your loan in a forbearance for the payments you missed. Here's what this means: Your account was no longer considered delinquent and was made current.
The student loan tax offset program resumed in 2024. If you have federal student loans in default, your 2025 tax refund may be at risk. If you're behind on payments, try using a student loan calculator to help come up with a repayment strategy and contact your student loans servicer about getting caught up.
Your federal student loans may be placed in an “administrative forbearance” if an administrative or technical issue is impacting your ability to pay your bill. You'll be off the hook for student loan payments and interest accrual until the problem is resolved.
Many borrowers who have MOHELA as a student loan servicer have gotten messages about being on administrative forbearance. If you're one of these borrowers, it's likely due to the legal battles over the SAVE program. Some borrowers report that their forbearance will last until 2040.
Starting July 2024, payments will be based on 5% of discretionary income. This will result in lower and more affordable monthly payments for borrowers. Income-Driven Repayment (IDR) Forgiveness for SAVE borrowers will change to as low as 10 years for borrowers with initial student loan balances of $12,000 or less.
Collections (offset and garnishment) on most defaulted loans will stay paused through Sept. 30, 2024, due to the Fresh Start program.
The Fresh Start program for borrowers with previously defaulted student loans will prevent withheld tax refunds through at least September 2024. And borrowers won't newly fall into default as payments resume. The White House announced a 12-month student loan on-ramp from Oct. 1, 2023 to Sept.
You were either enrolled in the SAVE Plan or about to have your payments lowered under it. A federal court recently blocked the implementation of the SAVE Plan. To comply with the court order and prevent incorrect billing, the Education Department directed MOHELA to place affected borrowers into forbearance.
The one-time account adjustment, also known as the payment count adjustment, has been a significant initiative in providing loan forgiveness to many borrowers. The deadline to qualify for this program has recently been extended to June 30, 2024, allowing more borrowers to benefit from the change.
Your student loan servicer(s) will notify you directly after your forgiveness is processed. Make sure to keep your contact information up to date on StudentAid.gov and with your servicer(s). If you haven't yet qualified for forgiveness, you'll be able to see your exact payment counts in the future.
Why did my college send me a check? A refund check is money that is directly deposited to you by your college. It is the excess money left over from your financial aid award after your tuition and additional fees have been paid. Your college may send you a check or the money may be deposited into your checking account.
Each time you satisfy a bill due, we will automatically advance your next payment due date and your billing statement will indicate a payment is not required for that bill. You may still continue to make payments to decrease your total interest cost and pay your loan off sooner.
Biden Administration Extends Student Loan Collections Pause Until 2025. According to Politico, the Biden administration indicated last week that it will not pursue involuntary collections activities against defaulted federal student loan borrowers until early 2025.
Deferment or an income-driven repayment (IDR) plan is preferable to forbearance. Forbearance for federal student loans takes two forms: general and mandatory. To avoid default, you must continue making required payments on your student loans until your forbearance application has been approved.
For tax year 2024, the standard deduction for married couples filing jointly rises to $29,200, an increase of $1,500 from 2023. For single taxpayers, the standard deduction rose to $14,600, a $750 increase from the previous year.
There's one upside to your student loan payments: they might reduce your 2024 tax bill. The student loan interest deduction allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt.
Can the IRS take my refund for student loans if I'm approved for a deferment? Share: If your student loan is in deferment, the IRS won't take your refund. The IRS will only take your refund if you're delinquent with your student loans to offset debt.
No, the government will not take your refund (for now). But before you start celebrating, here are five things you need to know about your student loan in 2024. Your student loan interest will continue to accrue.
Those who are not able to make monthly payments until September 30, 2024, will not be considered delinquent, placed in default, or submitted for tax refund offset requests (The White House, 2023). Borrowers with no defaulted loans pre-pandemic will not be impacted by tax refund offsets until after 2025.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
The Bottom Line
Paying off your student loans faster can be well worth the effort. Not only will you save money in the long term, being debt-free means less stress and more opportunities to use your money as you see fit, whether that's investing, recreation, or anything else.
Starting in July 2024, payments for borrowers with only undergraduate student loans will be cut in half. Those monthly payment amounts are currently calculated to be 10% of your discretionary income, but in July 2024 that number will drop to only 5% of your discretionary income.
A deferment is a temporary pause to your student loan payments for specific situations such as active duty military service and reenrollment in school. You can apply for a deferment with your loan servicer, and you must continue to make payments until you've been notified that your deferment was approved.