How to prepare for student loan payments restarting

The COVID-19 federal student loan payment pause is ending and payments will resume starting in October. Transitioning back to making payments again might feel challenging, but there are steps you can take to feel confident and prepared.

Note:

• If it’s your first time making federal student loan payments, visit StudentAid.gov for next steps.
• If your federal student loans are in default, visit StudentAid.gov for details about Fresh Start.

When do federal student loan payments start?

Interest on federal student loans will resume on September 1, 2023, and payments will be due starting in October 2023. Your servicer will notify you of your payment amount and due date at least 21 days before your payment is due. For more details, visit StudentAid.gov.

How to prepare for student loan repayment

1. Identify your servicer

Your federal student loan servicer may have changed since the payment pause began. To identify your loan servicer, you can:

• Log in to your StudentAid.gov account and visit the “My Loan Servicers” section.
• Call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

If you haven’t already done so, create an online account with your student loan servicer. Make sure your contact information is current on your StudentAid.gov account and with your servicer so you don’t miss any important notifications. You will need to do this for each servicer if you have more than one.

2. Clarify your monthly payment and due date

Your servicer will notify you of your payment amount and due date at least 21 days before your payment is due. You can also log in to your servicer account to get the details or call them for this information.

You can expect your monthly payment and due date to be the same as they were before the student loan payment pause began, but it’s a good idea to double-check.

Signing up for automatic payments may reduce your interest rate. If you want to enroll in autopay, now is the time to set that up to avoid missing an upcoming payment. Even if you were enrolled in autopay before the payment pause began, you likely need to re-enroll with your servicer.

3. Review your budget

Once you’re clear on your monthly payment amount, you’ll want to review your budget to see if it can cover your student loan payment. A working budget makes room for the following:

• Necessities: Your housing payment, utilities, phone bill, student loan payment, and other essential bills
• Wants: Shopping, eating out, and other discretionary purchases
• Financial goals: Retirement contributions, emergency funds, and money you set aside each month for long- and short-term goals

After factoring in your student loan payment, does your monthly spending plan feel comfortable or stretched thin? If things are tight, consider cutting or reducing some expenses.

4. Assess your repayment plan

If your financial circumstances have changed since the student loan payment pause began, you may want to consider changing your federal repayment plan to one that might work better for your budget. The standard repayment period for federal student loans is 10 years, and there are additional plans available such as:

• Graduated Repayment Plan
• Extended Repayment Plan
• Saving on a Valuable Education Plan (SAVE)
• Pay As You Earn Repayment Plan (PAYE)
• Income-Based Repayment Plan (IBR)
• Income-Contingent Repayment Plan (ICR)
• Income-Sensitive Repayment Plan

You can use a loan simulator to find a federal repayment plan that best fits your financial situation. If you want to make changes to your repayment plan, contact your servicer to understand your options and eligibility.

5. Think about refinancing your student loans

Consolidating your student loans can help you better manage your loans by combining them into one, new loan to pay each month. You may be able to extend the duration of your loan and/or lower your interest rate, which can reduce your monthly payment. Keep in mind that when you extend your loan repayment, you end up paying more in interest so your loan costs more.

If you have multiple federal student loans, you can apply for a Direct Consolidation Loan. Private lenders also have consolidation loans that can combine federal and private loans into one. It’s important to note that if you consolidate federal loans into a private consolidation loan, you’ll lose the flexible repayment options and any benefits associated with those loans.

6. Understand your options if you can’t afford to make payments

• Student loan forgiveness: Teachers, government employees, nonprofit employees, and certain medical professionals might be eligible for loan forgiveness, cancellation, or discharge. You may also qualify if you have a disability or are enrolled in an income-driven repayment (IDR) plan. Visit StudentAid.gov to learn more.
• Deferment or forbearance: If you still can’t afford to make payments, you can explore deferment or forbearance for your federal student loans, which allow you to temporarily reduce or postpone payments. With deferment, interest will not accrue on your loan balance. During forbearance, interest will continue to accrue. Keep in mind these are temporary solutions and can result in higher monthly payments when your loans come out of deferment or forbearance.

If you’re having financial difficulties, contact your servicer immediately before you miss a payment. Your servicer can provide options based on your circumstances to help you avoid delinquency and default.

If you have any questions or concerns about resuming your federal student loan payments, then reach out to your servicer. You can discuss your financial situation and see what options you have to keep you on track.