Student Loan Debt
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Student Loan Debt
Currently, 3.86 million Californians, or 9.8% of the state’s population has some form of student debt. Nationwide, student loan debt is at an all-time high of nearly $2 trillion and the average loan takes 20 years to repay.
Federal Student Loan Repayment Pause
The American Rescue Plan, in response to the COVID-19 emergency, gave a reprieve to those who currently owe student loans. The law reduced the interest rates on all loans held by the U.S. Department of Education to 0%. The 0% period is retroactive to March 13, 2020. The law automatically set currently active, delinquent, and defaulted federal student loans to 0% and the Education Department suspended collection activity.
The student loan payment moratorium ends August 31, 2022.
NEXT STEPS FOR BORROWERS
- Borrowers should update their contact information on their loan servicer’s website and with StudentAid.gov.
- Borrowers should contact their loan servicer to find out what their payment amount will be and when payments restart.
OPTIONS AVAILABLE FOR BORROWERS
- Consider an Income-driven repayment (IDR) plan.
- If the borrower already has an IDR plan but their income or family size has changed they should ask their servicer to recalculate their monthly payment.
- If you the borrower still can’t afford their payment and they only need a temporary pause on payments, they may want to consider a deferment or forbearance.
Public Service Loan Forgiveness
Limited PSLF Waiver Opportunity
On Oct. 6, 2021, the U.S. Department of Education (ED) announced a temporary period during which borrowers may receive credit for payments that previously did not qualify for PSLF or TEPSLF. Learn more about this limited PSLF waiver.
Most of the PSLF qualifying payment rules have been suspended through October 31, 2022. Under this temporary waiver, you may get credit for payments you’ve made on loans that would not normally qualify for PSLF. These payments will count even if you didn’t pay the full amount or on-time. However, only payments made after Oct. 1, 2007 can count as qualifying payments.
Loan types include: Direct Subsidized Loans, Direct Unsubsidized Loans, and Graduate PLUS Loans made to students.
The California State Loan Repayment Program (SLRP)
Resources for Student Borrowers in California
The California Department of Financial Protection & Innovation works to ensure that student borrowers who have fallen behind on payments have the information they need to get back on track, a crucial part of an equitable economic recovery.
Know Before You Owe
Understand the basics about student loans, including different kinds of loans, interest, the difference between servicer and lender, and more!
Helpful Events from the California DFPI
The California Department of Financial Protection and Innovation hosts events that can help student borrowers, including webinars, podcasts, and other helpful resources. Check their page for the latest!