Millions of student-loan borrowers just lost access to a key debt relief program — and it could have big financial consequences

• The on-ramp period for student-loan borrowers ended October 1.
• It means that servicers will start reporting missed payments to credit agencies.
• The Fresh Start program, set to return defaulted borrowers to good standing, ends October 2.

A program that protected student-loan borrowers from the consequences of missed payments has come to an end.

The on-ramp period was implemented last October to give borrowers some leeway after the over three-year pause on federal student-loan payments ended. It ensured any missed payments were not reported to credit agencies, protecting borrowers from the consequences of delinquency and default.

With the on-ramp period now over, those consequences are back. Borrowers who miss payments could suffer hits to their credit scores, and defaulted payments could prompt wage garnishment and the seizure of federal benefits like Social Security.

Some advocates have called on President Joe Biden to extend the on-ramp period given other financial challenges facing millions of borrowers, like legal challenges preventing many of them from getting lower monthly payments through the SAVE income-driven repayment plan.

For example, the Center for American Progress — a left-leaning think tank — wrote a letter to Education Secretary Miguel Cardona on September 18 urging him to extend the on-ramp period, saying that "while the fate of the student loan system is hashed out in court, borrowers need continued support in the form of an extended on-ramp."

"Between ongoing servicer issues, the legal injunction preventing the Department from implementing portions of the SAVE plan and other income-driven repayment plans, and the associated confusion around administrative forbearance, borrowers need more time to successfully navigate their student loans," the letter said.

The Education Department previously said that it did not have any plans to extend the on-ramp period, and it's unclear whether the department will implement any additional forms of relief.

Pew Research Center recently conducted a survey of 1,533 borrowers that highlighted the impact the on-ramp period had on those who could not afford their monthly payments. According to Pew, 13% of borrowers did not make payments during the on-ramp, and 76% of those borrowers cited financial concerns as the key reason for falling behind. Another 12% of surveyed borrowers reported inconsistent payments, making them particularly vulnerable to delinquency once the on-ramp period ends.

Along with the on-ramp, a separate program known as Fresh Start is coming to an end. Fresh Start began in 2022 to return borrowers in delinquency or default into good standing before entering repayment, and the Education Department planned to end that program on October 1. However, BI first reported on Monday that technical difficulties accessing the Fresh Start website led the department to extend the deadline to October 2 at 3 a.m. ET.

Meanwhile, other forms of relief remain blocked in court. Along with the SAVE plan, Biden's broader student-loan forgiveness plan under the Higher Education Act is facing a temporary restraining order, meaning the administration cannot move forward with implementing the relief pending a final legal decision.