Temporary student loan benefit ends Monday – what borrowers should show

WASHINGTON - A temporary benefit for student loan borrowers that relates to the pandemic pause ends on Monday. 

When student loan payments resumed in October 2023, the U.S. Department of Education announced a temporary "on-ramp" period through Sept. 30, 2024. 

This 12-month grace period protected borrowers from some of the biggest consequences of a missed, late, or partial payment, including negative credit reporting for delinquent payments, the department said. 

Payments were still due during this time, and interest continued to accrue, but the Education Department didn’t report late payments as delinquent during the grace period. This will resume starting on Tuesday, Oct. 1.

Nearly 30% of borrowers – or 9.7 million people – were past due on their payments and accounted for $290 billion in outstanding loans as of January, according to a report published in July by the U.S. Government Accountability Office.

What happens if you don't pay back your student loans

FILE - Students walk the campus of Farmingdale State College, located in East Farmingdale, New York on Nov. 3, 2022. (Photo by Steve Pfost/Newsday RM via Getty Images)

For those who can’t make their student loan payments or make them late, the loan may eventually go into default – meaning that status will be reported to national credit reporting agencies and can seriously damage your credit store and ability to borrow in the future. 

As the Education Department notes, the government can also collect on loans by taking funds from wages, tax refunds, and other government payments.

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Meanwhile, the Education Department under the Biden administration has been seeking to provide a faster path to loan cancellation, and reduce monthly income-based repayments from 10% to 5% of a borrower’s discretionary income, with the SAVE plan. 

However, two separate legal challenges to the SAVE plan have been making their way through federal courts, and the Supreme Court in August rejected an administration request to put most of it back into effect. 

In 2023, the Supreme Court’s conservative majority also rejected an earlier Biden plan that would have completely wiped away more than $400 billion in student loan debt.