WASHINGTON D.C., DC — It has been almost a year since federal student loans payments resumed. Payments were paused for more than three years because of COVID. To try and ease borrowers back into paying, The Department of Education said it would have an 'on-ramp' period.
For the first 12 months of repayment, DoE said it would not report late payments to the credit bureaus. Typically, late payments are reported when they are 90 days, or three months past due.
Now, that on-ramp period is coming to an end. Starting Oct. 1, 2024, the credit clock will begin ticking again.
The DoE reports that nearly 6.7 million borrowers had been shielded from negative credit reporting since monthly payments resumed.
Kate Wood, a lending expert with NerdWallet said that in general, having a delinquency on your report is going to lower your credit score.
"That missed month payment could linger for a long time, potentially as long as seven years on your credit report," Wood explained.
If you cannot swing payments, make a plan now. Wood suggests reaching out to your loan servicer directly and asking about deferment or forbearance options.
The online application for Income Driven Repayment Plans, however, is paused.
Mohela, an officer servicer of Federal Student Aid, has the following message posted on its site:
A federal court issued an injunction preventing the U.S. Department of Education from implementing parts of the Saving on a Valuable Education (SAVE) Plan and other IDR plans. The U.S. Department of Education is assessing the ruling and will continue to update StudentAid.gov/saveaction with more information.