The expiration of temporary pandemic-era protections, coupled with rising living costs and federal policy changes, has created a student loan default cliff.
Key Takeaways
- Payment shock from the end of pandemic loan protections, plan adjustments and higher living costs could push millions of federal student loan borrowers into default.
- Federal student loan default, typically after 270 days of missed payments, can trigger credit damage, added fees and wage garnishment.
- Borrowers can control the damage with early action, including confirming loan status and exploring additional repayment options.
Pandemic-era federal student loan protections have expired, and millions of borrowers who haven't resumed payments are facing default. At the same time, borrowers are dealing with repayment plan changes, annual income recertification and the upcoming termination of the most generous income-based repayment plan. All of these changes can result in higher monthly payments that make it difficult to stay current.
Here's what you need to know about the student loan default cliff, when delinquency becomes more serious with default, and steps you can take to avoid defaulting on federal student loans.