Purpose of the Strike: The Debt Collective, a debtors' union, is organizing the strike with the goal of urging the government to enact broad student debt cancellation.
Borrowers are encouraged to participate by paying $0 per month on their student loans through various means, such as applying for borrower defense to repayment or enrolling in income-driven repayment plans.
Temporary Reprieve with On-Ramp: Starting on October 1, 2023, the government plans to implement a 12-month student loan "on-ramp" period.
During this time, borrowers are encouraged to make payments if they can afford to do so.
Importantly, the government won't send accounts to collections or report negative information to credit bureaus during this period.
Consequences During On-Ramp: If borrowers do not make payments during the on-ramp, two main issues may arise. Interest will continue to accrue on the debt, increasing the overall repayment cost.
Additionally, missed payments won't count toward loan forgiveness programs like Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness.
Consequences After On-Ramp: Once the on-ramp ends on September 30, 2024, missing payments becomes more serious. Delinquent accounts can hurt credit scores, and after 270 days, the loan defaults.
Defaulting leads to collections, fees, potential tax refund and wage garnishment, and the entire loan balance and unpaid interest become immediately due.
Alternatives to Consider: Instead of participating in a student loan strike, borrowers have several alternatives to manage their loans:
– Public Service Loan Forgiveness (PSLF) – Income-driven repayment plans (IDR) – Loan consolidation – Deferment and forbearance for those facing hardship
Advocacy for Loan Forgiveness: Borrowers interested in advocating for student loan cancellation or forgiveness can take other actions, such as contacting their members of Congress to support initiatives aimed at helping student loan borrowers.
Ultimately, the decision to participate in a student loan strike should be made after understanding the potential risks and exploring other options for managing student loans.