Federal Student Loan Payments Resume Soon – What You Need to Know
Most federal student loan payments and interest have been suspended since March 2020. After numerous extensions and the Supreme Court's decision on Biden's forgiveness plan, student loan interest will resume on September 1, 2023, and payments will resume starting in October.
What does that mean to federal student loan borrowers, and what steps do you need to take to prepare for repayment? Below we outline several key items to help ease the stress of restarting your federal student loan payments. For the latest updates, visit the Federal Student Aid website. (Keep in mind that these guidelines apply to your federal student loans only; if you have private student loans, your payments have not been affected and you can access your loan information via your servicer’s website.)
Log in to your student loan servicer’s account to review your loan details and your contact information.
Servicers will notify borrowers before payments resume, so it’s important to make sure your contact information — including email address, mailing address, and phone number — is up to date. Not sure who your servicer is? Visit your Federal Student Aid dashboard and log in to view your loan details. You can also contact the Federal Student Aid Information Center at (800) 433-3243. Keep in mind that servicers changed for about 2 million borrowers during the time payments were paused, so be sure you know who currently services your loan(s).
Watch for correspondence about exactly when your payments will resume.
While payments are slated to resume in October, not all borrowers will need to restart their payments at exactly the same time. There are many factors that affect when your first loan payment will be due, and your loan servicer will communicate those details to you.
Review communication about your loans carefully to avoid scams.
Unfortunately, many scammers take advantage of borrowers in times like these. Do not provide any personal information via phone or email unless you are certain you are communicating with your loan servicer. If you’re unsure, look up the contact information on your servicer’s website, and reach out to them directly. This also goes for promises of student loan forgiveness – remember, if an offer seems too good to be true, it probably is.
Prepare your finances for repayment.
If you have not been making payments during the pause, you will need to incorporate student loan payments back into your budget. Once you know when your payments will resume and how much your payments will be, review your expenses and plan accordingly.
Studentaid.gov provides a loan simulator where you can learn more about repaying your federal student loans, or what to do if you cannot afford your payment. You can also contact your servicer to discuss what options may be available, including income-based repayment plans.
Explore income-driven repayment (IDR) plans.
Qualified borrowers have access to four IDR plans that can help reduce their monthly payments. All those enrolled in the REPAYE plan will automatically be enrolled in the new SAVE plan this summer.
Don’t wait until the last minute.
Roughly 44 million borrowers will be resuming payments this fall, and there could be long waits for personal assistance. Take care of as much as possible as SOON as possible to set yourself up for a smooth transition, especially if you believe you will need to change repayment plans, or if you were in forbearance on a loan prior to the pause.
Consider Student Loan Consolidation or Refinance
Once you’ve gotten all the pieces in place, you may also want to consider Federal Student Loan Consolidation or private student loan refinance* to simplify your loan repayment. Both options could potentially lower your monthly payment, and private student loan refinance could help you pay back your loans sooner to save on interest over time.
We can help!
*Federal student loans may qualify for payment and interest rate benefits that private student loans do not. Carefully consider your options before refinancing federal student loans, as they will no longer qualify for current and future federal benefits once refinanced with a private lender. For more information, visit studentaid.gov or contact your federal student loan servicer.
We provide the tools to build a smart financial future. Subscribe now!