President Joe Biden’s plan to forgive up to $20,000 in student loan debt was blocked by the Supreme Court at the end of June, but he and Vice President Kamala Harris have made it their mission to deliver some sort of debt relief. Their latest action forgives $39 billion in student loan debt, but it doesn’t apply to many borrowers.
Read more: Expert Advice for Borrowers After the Fall of Student Loan Forgiveness
Though the plan to resume student loan payments is based on a deadline of 60 days after June 30, your repayment start date will depend on the banks handling your debt. Loan servicers, the third-party companies the federal government contracted to manage borrowers’ accounts, are working overtime to restart billing procedures for tens of millions of customers.
Here’s everything we know about when student loan payments and interest are starting up again and what borrowers can do to prepare.
When will student loan payments and interest resume?
In May, Secretary of Education Miguel Cardono testified to the Senate that payments would resume 60 days after the court’s decision or 60 days after June 30 (which turned out to be the same date).
Student loan interest will resume on Sept. 1, 2023, and payments will be due starting in October, according to the Department of Education website.
Exactly when in October depends on which loan servicer is handling your account, CNN reported. The DoE said borrowers will be notified about details “well before payments restart.”
Read on: Find Out Who Your Student Loan Servicer Is
Which student loans are currently paused?
The moratorium on payments and interest included all federally held student loans, regardless of what company is servicing the loan. Eligible student loans include:
- Direct federal student loans.
- Federal Family Education Loan program loans held by the Department of Education, aka FFEL.
- Federal Perkins Loans held by the Department of Education.
- Defaulted FFEL loans not held by the Department of Education.
- Defaulted Health Education Assistance loans, aka HEAL.
Student loans that are not eligible include:
- Nondefaulted FFEL loans not held by the Department of Education.
- Federal Perkins Loans that are not held by the Department of Education.
- Nondefaulted HEAL loans.
- Private student loans.
How can I prepare for payments to resume?
The Consumer Financial Protection Bureau estimates that one in five student loan borrowers will struggle to make payments once the pause ends. While more borrowers will be eligible for Biden’s new income-driven repayment plan, others with higher incomes will face a significant new budget item every month.
Here’s how to prepare for student loan payments to resume.
1. Reconnect with your student loan servicer. If you moved or changed financial institutions, it’s important to provide current information. Even if you didn’t, you may need to reestablish automatic payments.
During the pandemic, some companies exited the student loan business, so a different one may be managing your account.
You can locate your loan servicer on the Department of Education’s Student Aid website.
2. Look into income-driven repayment plans. Chances are, you haven’t been budgeting for student loan payments over the past three years. You might have new expenses, a lower-paying job or any other number of variables.
You may be eligible for an IDR plan. They typically take longer to pay off, but make monthly payments more manageable and prevent borrowers from missing payments or defaulting. The main IDR plans are:
- REPAYE (revised pay as you earn) plan
- PAYE (pay as you earn) plan
- IBR (income-based repayment) plan
- ICR (income-contingent repayment) plan
3. Find out if your monthly balance has changed. If you’re on a traditional repayment plan, your loan servicer may recalculate your monthly payment based on your current balance and the remaining repayment schedule, the StateAdvance reported. You can check the Student Aid website for updates on resuming payments.
If you’re on an IDR plan already, payments will typically return to what they were before the pause, unless you’ve switched plans or recertified.