Recently, Federal Student Aid (FSA) released new quarterly portfolio reports outlining updates on federal student aid programs (Source: studentaid.gov). The data in the Student Aid Data report signaled an upcoming perfect storm for federal student loan borrowers that may catch many unprepared for when repayment restarts. Let’s take a closer look at some of the key points from the report, what they mean for the average student loan borrower, and how getting proactive ahead of repayment restart can help.
Loans Without Repayment Plans
According to the report, there are currently 8.1 million federal student loan borrowers with at least one loan without a repayment plan (Source: studentaid.gov). That’s a significant increase from just 1.2 million borrowers in March 2020. Additionally, 5.8 million of those borrowers have no reported repayment plan on any of their loans in deferment, forbearance or repayment. These borrowers will need to enroll in a repayment plan once repayment resumes.
Borrowers May Have Questions
When repayment restarts, all of these borrowers will be placed on the 10-year standard student loan repayment plan unless they contact their servicer to enroll in a repayment plan that better fits their financial situation. With so much uncertainty around exactly when repayment will begin, it could leave millions of borrowers scrambling to figure out what they need to do (Source: forbes.com). Since the majority of borrowers did not make a payment during the repayment pause, many may be out of practice when it comes to working with their servicer (Source: federalreserve.gov). To further complicate things, nearly 10 million borrowers had their loans transferred to different servicers during the repayment pause and may not even know who to contact (Source: cnbc.com).
How Borrowers Can Prepare
Ahead of repayment restart, one of the best things federal student loan borrowers can do is be proactive as soon as possible. That includes refamiliarizing themselves with the details of their servicer, their current repayment plan and any additional repayment options that may be available.
How Can Borrowers Find Their Servicer?
Servicers are the first line of support for federal student loan borrowers. Fortunately, borrowers can find servicer information for all of their loans on the FSA website (Source: studentaid.gov).
What Should Borrowers Do If Their Servicer Changed?
Borrowers who had their loans transferred during the payment pause may have questions and need a bit more support. FSA has resources specifically designed to assist borrowers with the transfer process (Source: studentaid.gov).
How Can Borrowers See Their Repayment Options?
In addition to contacting their servicer, student loan borrowers can use FSA’s Loan Simulator to get a peek at which plans they could be eligible for, expected monthly payment amount and overall repayment total (Source: studentaid.gov).
Additional Support for Borrowers
While there are many things borrowers can do on their own, employers can also provide additional support that could make a big difference in the financial well-being of their employees from repayment restart and beyond. With financial stress and lingering student loan concerns on the horizon, don’t wait to offer support that could give your employees peace of mind. Adding financial wellness support like student loan repayment assistance or online financial education to your benefits package could help your employees find financial success while boosting your credibility and saving on turnover costs.