NASHVILLE, Tenn. (WTVF) — Payments on federal student loans are set to kick back in for roughly 37 million borrowers in just over a month.
Payments were paused due to the pandemic with plans to resume on May 1, however, signals have been mixed on whether that deadline will be extended. Millions of borrowers are in limbo with financial preparations.
Payments on federal student loans were first halted in spring 2020 as the coronavirus pandemic plunged the country into an economic crisis. Since then, it has been extended multiple times, most recently by President Joe Biden last December, when it was pushed to the current May 1 restart date.
"I think it's still up for grabs whether payments will be turned on or not," said Natalia Abrams, president and founder of the Student Debt Crisis Center. "If in fact, they are, borrowers are not ready to resume payments."
Last year, there were several rounds of communications ahead of the planned restart to help prepare borrowers — even though in the end the pause was extended.
The Department of Education has said it will continue communicating directly with borrowers with clear and timely updates about repayments. The CARES Act requires at least six notifications about payments restarting, but those could all go out between now and May. With the new deadline looming, there are concerns.
As the payment pause deadline closes in, student loan experts have said borrowers should focus on their budgets in preparation.
They should also make sure that their student loan servicers have their most up-to-date contact information.
For those facing continued financial difficulties, there may be other options including deferments, forbearance and income-driven repayment plans for borrowers even after the federal pause ends. Such options should be discussed with a borrower's student loan servicer.
In a recent survey by the Student Debt Crisis Center, 92% of fully-employed borrowers were concerned about being able to afford their payments due to rising inflation when the pause in May ends.
One in three borrowers claimed they've reduced spending on necessities like food, rent and health care in preparation for payments to resume.
