Preparing for October Changes: Understanding the Impact of the On-Ramp and Fresh Start Program Expirations

As of September 30, 2024, two critical federal student loan relief measures—the "on-ramp" for student loan repayments and the Fresh Start program—are ending, signaling a major shift for borrowers. These measures, put in place during the COVID-19 pandemic, provided temporary relief to millions of student loan holders by pausing payments and collections. With these programs ending, borrowers must prepare for the resumption of payments and consider the implications for their loan management strategies, especially in the context of Income-Driven Repayment (IDR) plans and the delayed processing of all IDR plans due to the SAVE court injunction.

The End of the "On-Ramp" for Repayment

The "on-ramp" refers to the temporary period between September 2023 and September 2024, where borrowers were allowed to skip payments without the threat of penalties or a hit to their credit scores. While interest accrued during this period, it provided a soft landing for borrowers re-entering repayment after years of paused payments. Now, with the on-ramp program concluding, borrowers are expected to resume monthly payments, and missed payments will carry more significant consequences, including negative impacts on credit scores and the potential for default.

Conclusion of the Fresh Start Program

The Fresh Start initiative, aimed at borrowers who had fallen into default before the pandemic, also ends on September 30. This program allowed defaulted borrowers to reenter repayment status and regain eligibility for federal benefits like IDR plans, loan forgiveness, and new loans. With its expiration, borrowers who have not taken action may find themselves at risk of renewed collections and wage garnishments. Borrowers previously in default should urgently seek to establish repayment arrangements or apply for IDR plans to avoid the financial strain of collections.

Impact on IDR Plans and SAVE Plan Delays

At the same time, borrowers are facing another challenge: the delay in processing IDR plan applications. Many borrowers transitioning to the new SAVE plan—promoted as a more generous and accessible version of REPAYE—are seeing their applications delayed due to a federal court order putting the plan on indefinite hold. With the on-ramp ending, these processing delays add an additional layer of complexity. Borrowers who had hoped to enroll in or switch to SAVE may face higher monthly payments, as their IDR applications are not being processed regardless of the IDR plan they are trying to enroll in. 

Preparing for What’s Next

As borrowers navigate these changes, it's crucial to remain proactive, patient, and most importantly, informed. Those impacted by the Fresh Start expiration or IDR delays should communicate with their loan servicers and explore options like deferment or forbearance if they are unable to make payments. Understanding the full scope of available relief programs and making timely decisions can help mitigate the financial stress brought on by these significant policy shifts.