Prepare for the end of the federal student loan pause

Tips to start paying your loans again

With federal student loan payments starting up again, you may be concerned about how they’ll impact your budget. Here are the details on when your payments will start and tips on how to prep for them.

Note: Private student loans (from banks and other financial institutions like Sallie Mae) were not part of the federal pause, and payments will continue to be made as usual.

When do federal student loan repayments start?

Federal student loan payments will be due starting in October, and student loan interest will resume starting on Sept. 1, 2023. Your federal loan servicer will notify you at least 21 days before the loan payment is due. Their communications will give you the actual amount due and the payment date.

Is your federal loan servicer the same as before?

To get an estimate of your upcoming payment and when it’s due, you can contact your federal loan servicer. There may have been some changes over the past few years in the company that’s servicing your federal loans, or you may have just graduated and will be making your first payments. It’s important that you know your servicer—here’s how to find out and what you need to do:

• Get information on what a servicer does and their contact info here.
• To locate who your federal loan servicer is, go to your account dashboard on StudentAid.gov and log in. In the “My Loan Servicers” section, you’ll see the information you need. You can also call the Federal Student Aid Information Center at 1-800-433-3243.
• Make sure that your servicer has your up-to-date contact information, so you receive the updates you’ll need.
  
  

Will your student loan payments change?

There's a chance that they may. Your payment will be based on:

• The amount of your current principal and interest balance
• The time you have remaining to repay your loan
• Whether you consolidated your loans during the payment pause; check with your servicer to check out whether this has happened
• What plan you’re on; if you’re on an income-driven repayment (IDR) plan and you haven’t changed it during the student loan relief period, your payments will be what they were before. If you’re on one of the other more traditional plans (standard, graduated, or extended) your payment amount may be recalculated.

You can get more information on whether your payment amount will change on the federal student loan site.

If you paused payments during this period, the date you pay off your student loans may be extended. For instance, if your repayment term is 10 years and you paused for two years, then that 10-year date may be pushed out two more years.

On the other hand, if you’re on an income-driven repayment (IDR) plan, then those suspended payments will likely count toward your forgiveness and your end date probably won’t be pushed out. Your servicer can confirm when your end date will be.

What to do before your federal student loan payments resume

Since it may have been a while since you’ve made federal student loan payments, the Department of Education suggests that you take these steps before your repayments start again.

1. Make sure your contact information is still correct for both your federal loan servicer and your studentaid.gov profile, especially if your address has changed.
2. Confirm you’re still enrolled in auto debit. If you’re not, sign up for it through your loan servicer. Note: according to studentaid.gov, for most borrowers, auto debit won’t automatically resume—you’ll need to opt in again. It’s best to check with your servicer.
3. Find a repayment plan that meets your financial needs by using a loan simulator. You can also see if consolidation is a good idea for your situation.
4. Think about requesting an income-driven repayment (IDR) plan. It may make your federal student loan payments more affordable since it’s based on your income and family size.

If you decided not to make payments during this period, you may be out of the habit of regularly making them. Start putting aside money now for when your payments resume.

This is also a good time to look at your income and expenses to see what impact student loan payments will have on your budget. Use an online budget app; this monthly budget worksheet can help you get started.

If you’re having trouble making your student loan payments

There may be ways to get help making your payments:

• You can request additional relief.
• If you work (or have worked) in public service in the federal, state, tribal, or local government, or for a non-profit organization, you can see if you’re eligible for the Public Service Loan Forgiveness program.
• You can consider refinancing but understand that you might have to give up federal student loan benefits like income-driven repayment (IDR), forbearance and deferment, and Public Service Loan Forgiveness.
• If you’re in a temporary financial bind, deferment or forbearance might help you suspend payments for a short time.

One thing you shouldn’t do is ignore your required payments, which could put your account in default. This is a serious decision. Consequences of being declared in default can include:

• Being reported to the credit bureaus—which can affect you buying a house or car or getting a credit card
• The entire unpaid balance being due immediately
• The garnishment (withholding) of your wages, which will be sent to the loan servicer

At the first sign of financial difficulties, contact your federal student loan servicer to find out what repayment options are available to you.

If you’re having difficulty making payments for both your federal and private student loans, contact your loan originator and servicer right away. They may be able to work with you to help you through this period.

With a little planning now, you can feel confident as you move ahead with your monthly federal student loan payments.