Student loan due again? Here's what to know
For more than 1.5 million Illinois residents, this week brings an extra financial hit as federal student loan payments return after a COVID-19 hiatus that began March 2020.
Loan interest began accruing in September and October marks the resumption of payments.
For Cristóbal Cavazos of Wheaton that means about $800 a month, or “almost what I earn in a week,” at the nonprofit Immigrant Solidarity DuPage organization.
“I have not been looking forward to this day, but that's my financial responsibility,” said Cavazos, who owes $150,000.
Over 40 million Americans are impacted by the payment restart. The average undergraduate student federal loan debt is about $37,300 and the average for someone with a master's degree is more than $83,000, according to the Education Data Initiative.
For borrowers a little rusty after 3½ years of the payment freeze, help is available at studentaid.gov, the Illinois Student Assistance Commission's Lynne Baker said.
The website allows borrowers to check if their loan servicer is the same or if it changed during the pandemic, and update their contact information if necessary, she noted.
“It can sometimes look daunting but it's not necessarily that difficult,” said Baker, ISAC managing director of communications.
“Once you know who your loan servicer is, you can get in touch and they can help you through the process. For example, you may have to sign up for auto debit again.”
In addition, “your financial circumstances may have changed. There are new income-driven repayment plans out there and loan servicers are the ones to help decide what's going to be a better repayment plan for you,” Baker said.
The U.S. Department of Education has also created a “temporary on-ramp period” that lasts through Sept. 30, 2024. If loan payments are missed or late over the year, borrowers will not be reported as delinquent although interest charges will continue to accumulate.
For low-income individuals with student debt, the government is also offering the Saving on a Valuable Education Plan that provides reduced monthly payments.
To speak with someone by phone about student loans, call the Federal Student Aid Information Center at (800) 433-3243.
Cavazos' father was a former farmworker and he is part of the first generation in his family to attend college and later graduate school.
He relied on student loans to get by and now “it's going to be hard. We'll have to be living very frugally,” said Cavazos, who is a member of the Daily Herald's editorial sounding board.
As a member of Generation X, “we've had a lot of really bad breaks with COVID-19 and the Great Recession,” he said.
His payment plan would allow his debt to be forgiven in 10 years because he works at a nonprofit organization.
Some of his friends have had to defer their loans because they can't afford the payments. “I just really want to get this behind me,” Cavazos said.