The Carr Report: Student loan forbearance ENDS! ‘On Ramp’ payments period EXPLAINED!

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‘SAVE’ student loan repayment plan BEGINS!


Trying to stay up to date on what’s going on with student loans has been a juggling act. One week they’re discussing “payment pause.”  Another week they’re discussing “student loan forgiveness.” More recently they’re discussing a new student loan repayment plan being billed as SAVE—Saving on A Valuable Education.

If you’re confused about what’s going on with student loans, you’re not alone. Understanding what’s going on with student loans has been a juggling act because the politics revolving around student loans has been a whirlwind circus. In this article, I’m going to attempt to do what the ringmasters have failed to do. I’m going to stop monkeying around and attempt to provide the information and insight you need to know relating to your student loan. 

Since the onset of the COVID-19 pandemic back in March 2020, student loan borrowers in the United States have been granted a much-needed reprieve through various relief measures, including forbearance. In response to the economic challenges posed by the pandemic, the U.S. government implemented a series of relief measures to provide financial support to individuals and families. Among these measures was the suspension of federal student loan payments and the accrual of interest, known as student loan forbearance. This move aimed to ease the financial burden on borrowers grappling with sudden job losses, reduced incomes, and economic uncertainty.

As the country continues on its path to recovery, the student loan forbearance period which started in March 2020 was set to end on Sept. 1, 2023. That’s 40 consecutive months of no student loan payments for the vast majority of people who held federal student loans. During this 3.5-year forbearance period, there was no interest accrual on the outstanding loan balances.

While loans were in forbearance, President Joe Biden initiated a bill that was to forgive up to $10,000 of student loan debt for millions of borrowers. For those individuals who received a Pell Grant, their student loan forgiveness amount was to be up to $20,000. Millions of people were banking on their student loan debt being forgiven. The idea of no payments for 3.5 years followed by student loan debt being forgiven seemed promising. That was until the Supreme Court ruled against Biden’s Debt Relief program on June 30, 2023. As it stands today, interest on outstanding student loans began to accrue on Sept 1, 2023.  Payments on those loans will start October 1, 2023. Services are required to inform borrowers of their respective due date at least 21-days before its due.

This transition marks a significant milestone, with borrowers now needing to prepare for the resumption of loan payments and adjust to the new financial landscape. Student loan payment resuming is sure to create payment shock to the budget for millions of people forcing them to make hard decisions and sacrifices in other areas of their budget to make ends meet.

In an effort to ease people into resuming student loan payments, President Biden announced that federal student loan borrowers will have a 12-month “on ramp” period that will start September 2023 through September 2024.  During this period missed payments will not be reported to any of the major credit bureaus. Also during this period, no loans will be placed in delinquency or default status.

During this period, interest will continue to accrue on these loans. As a result, if you opt to make a partial payment or no payment during the on ramp period, unpaid interest will be added to your loan balance creating a larger principal balance and more interest accruing. Those of us in the industry refer to this as “The Debt Trap.” As a result, if you have the financial wherewithal to make full monthly payments, I strongly encourage you to do so.

The issue of student loan debt has been a pressing concern for millions of Americans, hindering their financial stability and impeding economic growth. Recognizing the urgency of the situation, President Joe Biden has proposed a comprehensive plan aimed at alleviating the burden of student loans. The “SAVE plan” offers a range of initiatives and reforms intended to streamline repayment processes, reduce interest rates, and provide greater relief for borrowers.

The Biden-Harris Administration announced the official launch of—the Saving on a Valuable Education (SAVE) plan and kicked off an outreach campaign to encourage eligible borrowers to sign up for the plan.

The SAVE plan is an income-driven repayment (IDR) plan that calculates payments based on a borrower’s income and family size—not their loan balance —and forgives remaining balances after a certain number of years. The SAVE plan will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster. To sign up for The SAVE Plan, go to

Below are some key tenets of the SAVE plan:

Income-Driven Repayment Overhaul:  At the heart of the SAVE plan lies a major overhaul of the income-driven repayment (IDR) options. Under these reforms, monthly payments would be capped at 10 percent of discretionary income, easing the financial strain on borrowers. Additionally, individuals earning less than $25,000 annually would be exempt from making any payments, allowing them to focus on building their financial stability.

Public Service Loan Forgiveness Enhancement: The SAVE plan seeks to enhance the Public Service Loan Forgiveness (PSLF) program. Borrowers who work in critical public service roles, such as teachers, nurses, and other essential positions, could be eligible for up to $10,000 of undergraduate or graduate student debt relief for each year of eligible service, for a maximum of five years.

Debt Cancellation for Low-Income Earners: The SAVE plan also includes provisions for immediate relief by canceling up to $10,000 of student loan debt for borrowers earning less than $125,000 per year. This measure aims to directly assist those facing financial challenges due to their student debt.

Addressing Predatory Lending Practices: The plan takes aim at institutions with poor student loan repayment rates, urging accountability. Schools failing to meet certain repayment standards might face potential loss of federal funding. This approach emphasizes institutions’ responsibility in equipping their students for successful loan repayment.

Streamlined Repayment Plans: Acknowledging the complexity of existing repayment options, the SAVE plan seeks to streamline these choices. By simplifying the selection process, borrowers can more easily identify the repayment plan that aligns with their financial circumstances.

Tax Relief for Loan Forgiveness: The plan addresses the concern of taxable income on forgiven student loans. The SAVE plan proposes that borrowers who receive loan forgiveness will not be subjected to tax liability, providing further financial reprieve.

(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website @



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