Get ready for student loan repayments resuming [three questions to ask to prepare]

Updated 9.12.23

After three years of pauses in federal student loan repayments, it is time for borrowers to prepare for those payments to restart; because of legislation passed into law in June 2023, the interest on these loans began to accrue on September 1, 2023, and payments will resume in October 2023.

You should receive a billing statement or notice at least 21 days before your payment is due. Borrowers can see the specific date of their next payment with their loan servicer by logging into their online account.

Here are three questions to ask yourself before student loan payments restart to make sure you are ready.

1) Who is my loan servicer?

There have been a lot of changes during the payment pause. As a result, you might have a new loan servicer and did not realize it. Time to check to make sure you know who is managing your loans!

• Make sure you can log into studentaid.gov and verify your contact information. Your dashboard will have your loan details, including your loan servicer and current payment plan option.
• Based on that information, go to your loan servicer’s website. Log in to your existing profile, or create a new one to set up your automatic payments. You can also call the servicer directly, but be prepared for long wait times.

2) Is my monthly payment affordable?

It is a good idea to revisit your budget and get back into the habit of setting aside that monthly loan payment. During the payment pause, you might have used the extra money that would normally go toward your student loans for ongoing living expenses, which is understandable! Put the amount you would normally pay towards your student loans into a savings account. This will give you time to adjust your budget as needed before the real payment is due.

How do I figure out my payment? Use the Loan Simulator to find out what payment plan meets your needs the best. It is a good idea to review all options, especially Income-Driven Repayment (IDR) plans if your income has gone down due to layoffs or furloughs. IDR plans can be helpful, because repayments can be as low as $0.00, depending on your household size and income. Among the IDR plans is the new Saving on a Valuable Education (SAVE) plan.

What if my payments are unaffordable? Contact your loan servicer before your payment due date to ask about a deferment or a forbearance. This option puts your payments in pause, but going forward, be aware that interest on your loans will start to accrue again. It is recommended to use this option sparingly, but it can be helpful to avoid loan default. Learn about the different types of deferment programs, their eligibility requirements and how to apply.

3) Do I qualify for any forgiveness, cancellation or discharge programs?

Sometimes change can be good! In this case, borrowers might qualify for forgiveness, cancellation or discharge programs that they might not have been eligible for previously,

• If you currently work for a government or non-profit organization, you might qualify for Public Service Loan Forgiveness after making 120 qualified payments. (And yes, the 36 months of payment pause counts towards your qualified payments.) If you have never applied before, now is great time to start! Some of you might have been told you did not qualify — but improvements have been made that could make you eligible now! Don’t delay in taking advantage of this incredible opportunity.
• If you went to a school that closed or is part of the borrower defense to repayment settlement, check your eligibility for a potential discharge.
• If you are totally and permanently disabled, you might qualify for the Total and Permanent Disability Discharge.
• Discharge Due to Death — federal student loans are discharged upon the death of the borrower, as well as PLUS loans their parents took out on their behalf.

Through 2025, any federal student loan forgiveness, cancellation or discharge is not treated as federal taxable income. Consult with a tax professional to see if this might affect your state income taxes.

For answers to frequently asked questions about the resumption of student loan payments, go to studentaid.gov.

BONUS Tip: Address your default NOW with Fresh Start

If your loans were in default due to nonpayment prior to March 2020, now is the time to fix it. Contact the Default Resolution Group at 800.621.3115, and ask them which agency is holding your defaulted student loans. Then call that agency and request the Fresh Start program.

Fresh Start is a free, one-time, temporary program that will provide you the support to get your student loans out of default quickly. Through Fresh Start:

• Your loans will be transferred to a loan servicer automatically.
• Your defaulted loans will be returned to “in repayment” status.
• The record of the default will be removed from your credit report.
• Access to federal student aid (loans and grants) is restored.

You will need to set up payments going forward with your new loan servicer. Learn more about Fresh Start here.

Phew! That was a lot of information. Good news, though; you don’t have to do it alone! We offer student loan counseling services and can assist you with understanding your repayment options, working payments into your budget, and getting back into good standing if you’ve defaulted on a loan. Call 888.577.2227 to schedule a free and confidential phone, in-person or virtual appointment with one of or certified, nonjudgmental student loan counselors.

Author Kim Miller is a certified financial counselor and program coordinator with LSS Financial Counseling.