There's a 'bunch of confusion' about the government's student debt forgiveness plans — some are reluctant to repay loans in case they don't have to. Here are the consequences if they refuse

Unfortunately, if you don't resume payments now or make a plan to avoid them through approved processes like deferment or forbearance, there could be serious consequences. Here's what you need to know.

Many are hoping for forgiveness

During the pandemic, the Department of Education (ED) paused student debt payments. While payments resumed in October 2023, the ED created an on-ramp period to provide an extra year of flexibility.

During this on-ramp period, interest would accrue but borrowers wouldn't be reported as delinquent to credit agencies.

Many took advantage of this grace period. In fact, Pew found that, as of this past summer, 13% of borrowers who owe money on federal student loans were not making payments during the on-ramp period. Among lower-income households, an estimated 32% of borrowers earning a household income of under $25,000 were behind on their student loan payments.

Stringent finances may be preventing borrowers from sending in payments — but others might be hesitant to pay what they owe and in the hopes forgiveness will pan out after President Joe Biden made eliminating student debt a centerpiece of his campaign.

Biden has put forth numerous forgiveness initiatives or plans to reduce the debt burden, many of which have been challenged or put on hold by the courts.

This has resulted in a "bunch of confusion" for borrowers, Zamir Baez of Boston told Bloomberg. "I don't want it to impact my finances, but it's also not clear what the consequences will be to not making payments."

Potential changes to the federal government, including a new president entering office in 2025, only adds to the uncertainty. But despite any hopes of possible future loan forgiveness, financial consequences may be on the way to anyone with student debt now that the on-ramp period has ended.