FAQ: Student loan interest + payments are back for millions of borrowers. What to know
For the first time in three years, millions of people across the country will have to start making student loan payments again this fall.
The pause on federal student loan payments, which was put into place at the beginning of the COVID-19 pandemic in 2020, has expired. Now that the freeze is over, roughly 40 million borrowers will have to start paying back college debt again.
Here’s what to know about paying back student loans and how to prepare:
When do student payments resume? When do I have to pay?
Beginning Sept. 1, student loan interest will resume, and payments will be due starting in October — unless you left school within the last six to nine months and are still in your automatic grace period. According to the Federal Student Aid office, borrowers will receive bills in September or October with the payment amount and due date.
Here are some tips the Department of Education recommend you do to prepare for payments:
Know which loan servicer you have.
Make sure your contact information is updated on your loan servicer’s website and in your StudentAid.gov account.
Explore repayment plan options.
Enroll in auto pay on your servicer’s website. The optional service will save 0.25% on your interest rate.
What about the president’s student loan forgiveness plan?
The Supreme Court rejected President Biden’s one-time debt relief program back in June, The Charlotte Observer previously reported.
If it had passed, it would’ve granted up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt relief to non-Pell Grant recipients.
Regardless of the ruling, the pause was still set to end after Congress passed a law preventing further extensions of the payment pause.
What if I can’t make my payment when it’s due?
There is a temporary on-ramp period through Sept. 30, 2024, which protects borrowers from having a delinquency reported to credit reporting agencies.
But payments are still due, and interest will continue to accrue. If your loans were eligible for the payment pause, you’re automatically eligible for the on-ramp.
Are there repayment plan options?
There are multiple income-driven repayment (IDR) plans to help pay back student loans.
Borrowers can compare repayment options using the Loan Simulator tool that calculates loans to choose a plan that best meet their needs. According to the Federal Student Aid website, if you don’t select a plan, your loan servicer will enroll you in the Standard Plan with payments based on your balance instead of your income and family size.
Are there other options for student loan forgiveness?
There are multiple types of forgiveness for federal student loans. Here are the available programs and who qualifies:
Public Service Loan Forgiveness: Medical professionals, government employees and those who work for nonprofit organizations may be eligible to have the remaining balance on direct loans.
Teacher loan forgiveness: Borrowers who teach full-time for five consecutive academic years in a low-income school or educational service agency may be eligible for forgiveness of up to $17,500 on direct loans or Federal Family Education Loan program loans.
You can find other options for loan cancellation and discharge on the U.S. Department of Education’s financial aid website.
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