{"id":582215,"date":"2023-07-10T23:32:00","date_gmt":"2023-07-10T20:32:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/looming-payments-put-spotlight-on-real-danger\/"},"modified":"2023-07-10T23:32:00","modified_gmt":"2023-07-10T20:32:00","slug":"looming-payments-put-spotlight-on-real-danger","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/looming-payments-put-spotlight-on-real-danger\/","title":{"rendered":"#Looming payments put spotlight on &#8216;real danger&#8217;"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a245dd803372\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a245dd803372\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/looming-payments-put-spotlight-on-real-danger\/#Interest_could_add_thousands_to_a_borrowers_debt\" >Interest could add thousands to a borrower\u2019s debt\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/looming-payments-put-spotlight-on-real-danger\/#Turning_on_payments_after_surging_inflation\" >Turning on payments after surging inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/looming-payments-put-spotlight-on-real-danger\/#%E2%80%98On-ramp_tricky_for_borrowers_in_timed-repayment_plans\" >\u2018On-ramp\u2019 tricky for borrowers in timed-repayment plans \u00a0<\/a><\/li><\/ul><\/nav><\/div>\n<div>\n<p>Americans with student loans could see thousands of dollars in interest added to their tabs as part of President Biden\u2019s backup relief proposal.\u00a0<\/p>\n<p>The Biden administration is attempting to use a proposed aid program to help millions of student debt holders handle the dual blow of payments resuming in October and the Supreme Court striking down a sweeping debt forgiveness plan.<\/p>\n<aside class=\"ad-unit ad-unit--mr1_ab\"><\/aside>\n<p>Biden\u2019s \u201con-ramp\u201d repayment plan allows borrowers in financial distress to delay payments from Oct. 2023 to Sept. 2024 without the threat of default or credit score decline.<\/p>\n<p>But unlike the current pause on student loans, interest will still accrue on those loans and give borrowers a steeper hill to climb when they begin payments again.<\/p>\n<p><strong>More to come: Borrowers stare down student loan repayments after years of high inflation<\/strong><\/p>\n<p>Experts are concerned that millions of Americans who leaned on loan relief throughout the pandemic may be caught off guard under the new system.<\/p>\n<p>\u201cI can envision millions of borrowers who are going to be deluded into thinking they don\u2019t have to think about their student loans for another year, the same way they didn\u2019t have to think about that for the last three years,\u201d said Jonathan Petts, cofounder of Upsolve, a nonprofit that seeks to helps people with difficult financial situations.<\/p>\n<p>\u201cI think there\u2019s a real danger for borrowers right now,\u201d Petts said. \u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr2_ab\"><\/aside>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"5900\" height=\"3934\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?w=900\" alt=\"\" class=\"wp-image-3880091\" srcset=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg 5900w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=300,200 300w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=768,512 768w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=1080,720 1080w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=1536,1024 1536w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=2048,1366 2048w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=645,430 645w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=50,33 50w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/03\/72e183d53644496497a1ddbb33430fa6.jpg?resize=876,584 876w\" sizes=\"auto, (max-width: 899px) 100vw, 876px\"><figcaption class=\"wp-element-caption\">Student debt relief advocates gather outside the Supreme Court on Capitol Hill in Washington, Monday, Feb. 27, 2023. Arguments at the Supreme Court over President Joe Biden\u2019s student debt cancellation left some borrowers feeling isolated as they heard such a personal subject reduced to cold legal language. (AP Photo\/Patrick Semansky)<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Interest_could_add_thousands_to_a_borrowers_debt\"><\/span><strong>Interest could add thousands to a borrower\u2019s debt<\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Interest on student loans accrues daily, posing a serious challenge for borrowers. <\/p>\n<p>Although the Biden administration has worked to change the way student loan interest capitalizes, a balance could grow substantially in a year\u2019s time.\u00a0<\/p>\n<p>Interest capitalization occurs when a loan\u2019s accrued interest is added to its principal balance so that future interest then accrues on a higher amount.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr3_ab\"><\/aside>\n<p>The administration proposed a new rule last summer that would limit instances of interest capitalization except when it is required. It is still unclear whether the administration will capitalize loans during the on-ramp period.\u00a0<\/p>\n<p><strong>Supreme Court blocks student loan forgiveness: What should borrowers do now?<\/strong><\/p>\n<p>For a borrower with $30,000 in debt, making no payments for a year while the interest accrues would lead to an extra $1,500 on their total, even if it doesn\u2019t capitalize and compound.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr4_ab\"><\/aside>\n<p>\u201cIf you\u2019re capable of making payments on your loans, you should do so. You shouldn\u2019t say, \u2018Oh I get another year of not having to pay my loan.\u2019 That would be making a mistake, because it\u2019s not really providing financial relief,\u201d student loan expert Mark Kantrowitz told The Hill.\u00a0<\/p>\n<p>\u201cYou\u2019re not going to get penalized in terms of ruining your credit,\u201d he continued. \u201cBut if you are able to make the payments on your loans, you should do so just try to get rid of the debt as quickly as you can.\u201d\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Turning_on_payments_after_surging_inflation\"><\/span><strong>Turning on payments<\/strong> <strong>after surging inflation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>More than 40 million borrowers are facing repayments that now will feel the added strain of stubborn inflation.<\/p>\n<aside class=\"ad-unit ad-unit--mr5_ab\"><\/aside>\n<p>Prices rose 3.8 percent annually in May, according to the personal consumption expenditures (PCE) price index. While inflation has fallen sharply from a 7 percent annual rate in June 2022, it remains well above the Federal Reserve\u2019s target of 2 percent.<\/p>\n<p>Inflation has increased the cost of goods and services ranging from housing prices to gasoline costs to grocery bills, and student debt might only exacerbate the burden for many \u2014 especially for lower income households.\u00a0 \u00a0<\/p>\n<p>\u201cPeople should not be incurring interest during this 12-month on-ramp period. So, I highly urge the administration to consider suspending those interest payments,\u201d Rep. Alexandria Ocasio-Cortez (D-N.Y.) said after the president\u2019s announcement.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr6_ab\"><\/aside>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"980\" height=\"551\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?w=900\" alt=\"\" class=\"wp-image-1672998\" srcset=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg 980w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=160,90 160w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=300,169 300w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=768,432 768w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=645,363 645w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=320,180 320w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=256,144 256w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=512,288 512w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=640,360 640w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=876,492 876w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=960,540 960w, https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2019\/03\/aoc_green_new_deal_03282019_1.jpg?resize=50,28 50w\" sizes=\"auto, (max-width: 899px) 100vw, 876px\"><figcaption class=\"wp-element-caption\">Rep. Alexandria Ocasio-Cortez (D-N.Y.).<\/figcaption><\/figure>\n<p>The administration argued it were not able to extend the payment pause again because of a provision in the debt ceiling deal Biden made with Speaker of the House Kevin McCarthy (R-Calif.) that required payments to resume this fall.\u00a0\u00a0\u00a0<\/p>\n<p>\u201cThe law requires us to end the payment pause this summer. We believe in the rule of law, and plan to follow it,\u201d a White House official previously told The Hill.\u00a0\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%98On-ramp_tricky_for_borrowers_in_timed-repayment_plans\"><\/span><strong>\u2018On-ramp\u2019 tricky for borrowers in timed-repayment plans <\/strong>\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Along with interest accrual, borrowers need to be aware if they are enrolled in programs such as Public Service Loan Forgiveness, which allow their loans to be forgiven after a certain number of years.\u00a0\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr7_ab\"><\/aside>\n<p>The current three-year pause on loan payments still counts towards a person\u2019s time towards loan forgiveness. That will not be the case under the on-ramp repayment plan.\u00a0\u00a0<\/p>\n<p>Art Young, executive director of the University of Arizona Office of Scholarships and Financial Aid,\u00a0 says this is the \u201cbiggest negative impact\u201d in Biden\u2019s plan. <\/p>\n<p><strong>Student debt: White House faces backlash for restarting interest on loans<\/strong><\/p>\n<p>Young said his office is urging students to reach out to their loan servicers, make sure they have explored all repayment options and that their contact information is up to date.<\/p>\n<p>Borrowers have options as the Biden administration is implementing new programs that could help cover interest payments and lower the monthly payment a person makes on their loans. \u00a0<\/p>\n<p>The administration said eligible borrowers can enroll in the REPAYE plan, which will be converted to the SAVE plan this fall. <\/p>\n<p>The new plan will cut monthly payments from 10 percent of discretionary income to 5 percent and ensure unpaid monthly interest won\u2019t cause a borrower\u2019s debt to grow if they\u2019ve been making their monthly payments. \u00a0<\/p>\n<p>\u201cWhat that means is the federal government is willing to say, \u2018Hey, you might not be making your full monthly payment in this program, but you will not accrue interest in the same way you would in a 10 year standard plan or another similar plan where interest accrues,\u2019\u201d Will Sealy, the CEO of fintech and certified B-corp\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.meetsummer.org\/\">Summer<\/a>, a group that helps student loan borrowers navigate their debt.<\/p>\n<\/div>\n<p>Copyright 2023 Nexstar <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Media<\/a> Inc. 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Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thehill.com\/homenews\/education\/4088833-a-real-danger-looming-student-loan-payments-put-spotlight-on-accruing-interest\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Americans with student loans could see thousands of dollars in interest added to their tabs as part of President Biden\u2019s backup relief proposal.\u00a0 The Biden administration is attempting to use a proposed aid program to help millions of student debt holders handle the dual blow of payments resuming in October and the Supreme Court striking&#8230;<\/p>\n","protected":false},"author":1,"featured_media":582216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/06\/649f5dce7904c2.98467738.jpeg?w=1280","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[79296,4997,117,5069,134661,141609,90482,70551,991,115,141939,79097,134345,144401,80241,4965,136951],"class_list":["post-582215","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-accessibility","tag-alexandria-ocasio-cortez","tag-business","tag-economy","tag-energy-environment","tag-evening-report","tag-house","tag-inflation","tag-joe-biden","tag-news","tag-politics-of-the-united-states","tag-president-joe-biden","tag-state-watch","tag-student-loan-repayment","tag-student-loans","tag-technology","tag-washington-d-c"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/582215","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=582215"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/582215\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/582216"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=582215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=582215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=582215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}