Did you know September 30, 2024 is a consequential deadline in the student loan world? As September 30 approaches, borrowers who are behind on federal student loan payments need to be aware of the looming consequences. During the past year, borrowers were shielded from credit reporting by the “student loan on-ramp,” but that protection is ending. Starting October 1, missed or incomplete payments will once again be reported to credit bureaus, threatening to lower your credit score.
How Will Your Credit Score Be Affected?
Once the on-ramp period ends, borrowers could see significant credit score drops. For individuals with a previously strong credit score, a missed payment could cause their score to plummet by over 100 points. This has far-reaching implications—damaged credit can affect your ability to secure future loans, and even result in higher interest rates on existing debt.
On the other hand, borrowers who already have lower credit scores may not experience as severe of a drop, but the financial repercussions are still serious. Having missed payments on your record can impact everything from renting an apartment to securing a mortgage.
Steps to Take Before October 1
While the deadline is fast approaching, it’s not too late to take action. Now is the time to reach out to your loan servicer. You don’t have to go it alone. Federal repayment plans, such as income-driven options, can offer borrowers the chance to reduce monthly payments based on their income. This can prevent loans from going into default and protect your credit.
For those who find themselves in significant financial hardship, there are additional options. Economic hardship deferments or applying for the Department of Education’s Fresh Start program are viable pathways. The Fresh Start initiative helps those in default return to good standing, and potentially qualify for student loan forgiveness.
Why Consulting a Lawyer for Student Loans Matters
If you’re unsure about what steps to take, consider seeking legal guidance from a lawyer for student loans. With experience navigating the complexities of student loan regulations, a lawyer can help you explore your repayment options, manage potential legal issues, and protect your financial future.
Act Now
With the end of the “on-ramp” just days away, now is the time to ensure you’re prepared. Don’t wait until missed payments are reported to credit agencies. Kaplan Law Firm offers personalized consultations to help you navigate this transition and explore solutions that work for you. Schedule a consultation today to safeguard your credit and financial well-being.
