ATLANTA — Time is almost up for millions of borrowers who've fallen behind on federal student loan payments. A federal relief program that kept the missed payment off your credit report for the past year is ending on Sept. 30.
For Shavon Goodwin, student loans have felt like a never-ending financial burden.
“Considering the amount of student loans I have, there is no way realistically that I can pay them back in this lifetime," Goodwin said.
The Atlanta nurse said she often struggles to make her monthly student loan payments.
“I have to pay my car note and my mortgage, so sometimes it does fall by the wayside. I’m not able to make the payment a particular month, but then I have to catch it up the next month, which puts me in a bind,” she explained.
She's been careful not to let her account go 90 days delinquent or in default. But millions of Americans are months behind on federal student loan payments.
Now, starting on Oct. 1, it will once again affect your credit.
“It means if you are past 90 days delinquent on your loans, you will see that on your credit report next month," financial expert Shavon Roman said.
After pausing federal student loan payments during the pandemic, the department of education resumed payments last October. But for the past year, the federal government's “on-ramp” period blocked missed payments from hitting your credit report.
That period ends Sept. 30, when delinquent accounts can be reported to credit agencies.
Roman said help is available for some borrowers, but you must sign up quickly. The federal Fresh Start program offers several options like an income-driven repayment plan.
“If you are in delinquency from one day to 90 days right now, you are eligible for that program. After Sept. 30, that program disappears. The program will bring you current, and you are also eligible to enroll in the payment program that you qualify for," she said.
Roman said doing nothing should not be an option. She points out that defaulting on your federal student loans not only hurts your credit, but the government can also garnish your wages and tax refund.
To find out more about the Fresh Start program and see if you're eligible, click here.