Spring college graduates typically begin repaying their student loans in November. But this year, things are different.
Most federal student loans come with a six-month grace period before new graduates have to start making payments on their college debt. Because of the pandemic, however, repayment of most types of federal loans has been automatically suspended until the end of the year.
That means recent graduates won't have to start making payments until January, unless the government extends the payment "pause."
Advocates for student loan borrowers said a delay beyond January is needed. But it's uncertain if that will occur, given the contentious negotiations between Democrats in Congress and the Trump administration over further pandemic relief ahead of the Nov. 3 presidential election.
"We really do need an extension of this payment suspension," said Persis Yu, director of the Student Loan Borrower Assistance project at the National Consumer Law Center. "It's a really terrible situation for borrowers."
The class of 2020 graduated into a job market with historically high unemployment. While the jobs picture had been improving over the summer and early fall, jobless claims have been volatile and more companies are announcing layoffs.
Since more help may not arrive, however, now is a good time to consider whether you will need a repayment plan that's more affordable based on your income, or if you should consider requesting a traditional forbearance, or postponement of payments, when the automatic suspension lifts.
You should receive a notice from your servicer — the company that handles billing for your loan — sometime before the end of the year indicating when repayment will begin and outlining options.
If you don't get a notice or if you get one indicating a first-payment due date after January, make sure your loan servicer has up-to-date contact information for you and to confirm the date, Yu said.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group, said borrowers can avoid the January rush and choose a payment option now and revise it later if their financial circumstances changed.
Moira Vahey, a spokeswoman for the Student Borrower Protection Center, an advocacy group, said servicers were not currently processing enrollments in "income driven" payment plans. Borrowers can protect themselves, she said, by submitting an application now so it is on file when servicers do begin processing them again.
More information about payment plans is available on Studentaid.gov.
