Student-loan borrowers who miss payments aren't fully protected during Biden's 'on-ramp' period

• Student-loan payments are resuming in October.
• The Education Department's one-year "on-ramp" period means it won't report missed payments to credit agencies.
• However, credit agencies might still factor in missed payments on credit scores.

Student-loan borrowers should careful about missing a payment when they resume next month — Biden's relief might not fully protect you.

After over three years, the student-loan payment pause is officially over — interest began accruing on federal borrowers balances on September 1, and the first bills will become due in October. This is an unprecedented transition back into repayment, and to ease the financial burden the Education Department announced a few options for relief, including a 12-month "on-ramp" period beginning in October during which the department will not report any missed payments to credit agencies.

"This on-ramp period protects borrowers from having a delinquency reported to credit reporting agencies. This prevents the worst consequences of missed, late, or partial payments. However,payments are still due, and interest will continue to accrue (add up)," the department wrote in its guidance.

However, the guidance also emphasized that while the department will not report borrowers as delinquent during the on-ramp, "we don't control how credit scoring companies factor in missed or delayed payments."

That means that even with this safety net, borrowers could still see their credit scores drop if they fall behind on payments over the next year. The department has also previously recommended that borrowers who can afford to make their payments do so because of the accumulating interest — but the potential impact on credit scores could be another consequence borrowers might face.

Along with the on-ramp, the Education Department also announced its new SAVE income-driven repayment plan, which is intended to lower borrowers' monthly payments and prevent unpaid interest from building on borrowers' balances as long as they continue making their payments. According to recent data from the department, 4 million borrowers are enrolled in that new plan.

Still, many borrowers are concerned with the repayment restart and their abilities to foot an extra monthly bill next month. Helena, a 58-year-old borrower with $145,000 in student debt, previously told Insider that her debt makes her feel "tremendously hopeless," and she's not able to look forward to retirement with the balance hanging over her head.

Even beyond the financial concerns with repayment, technical challenges have plagued student-loan servicers, leaving many borrowers frustrated because they cannot even get ahold of the company that manages their debt to get simple questions answered. For example, one company — Nelnet — has experienced call center and website outages multiple times over the past month, leading one borrower to write on X, formerly Twitter: "If I can't even access my accounts, how am I supposed to pay anything or manage my finances? How are we being charged interest under these conditions? Ridiculous."

The Education Department has said it continues to remain in close contact with servicers, but experts expect a flood of administrative challenges when borrowers' first bill comes due.