Student Loan Payments Are Due Again: Here’s What To Do

Payments for student loans have restarted since they were paused for COVID-19 emergency relief.

Depending on the kind of loan you have, when you graduated, and your income, you may be eligible for student loan forgiveness. There are a multitude of options available to manage your repayment plans.

Since student loans are no longer being deferred and the accruement of interest has restarted, it helps to familiarize yourself with what’s happening to your student loans and how paying them off can best fit your financial goals.

Are Student Loans Still Deferred?

The deferment of student loans ended in June 2023. Congress suspended payments and interest for the duration of the COVID-19 pandemic to offer Americans some financial relief.

Shortly after the end of the deferment program was announced, a plan to offer a 12-month “on-ramp” was introduced. Financially vulnerable borrowers who miss their monthly payments during this period are not considered delinquent. This also means the government will not report your loan as delinquent to credit scoring companies. The plan and its benefits are valid from October of 2023 to September of 2024.

The plan was introduced after the Supreme Court ruled in the Biden vs. Nebraska case (June 2023) that under the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, the administration does not have the authority to waive student loan debt.

When Are Federal Student Loans Due?

As a part of the initial relief aid, the U.S Department of Education put federal student loan interest on a pause in March of 2020. It resumed in September of 2023, with repayments starting the month after.

The repayments started in October of 2023. Once the on-ramp plan is completed in 2024, all student loans will go back to the original repayment plan as agreed upon by the loan servicer.

Will Student Loans Be Forgiven?

Whether you’re eligible for loan forgiveness depends on the type of loan you have and whether it makes sense to go through a student loan forgiveness program or try to pay off the loan earlier.

The Public Loan Student Forgiveness (PSLF) Program is available for qualifying people who carry Direct Loans, work full-time at a nonprofit or government organization, and have made at least 120 qualifying payments toward their loan first.

Most private student loans are ineligible for student loan forgiveness programs.

How Can You Manage Your Student Loan Payments?

Managing your student loans can be overwhelming, especially when the student loan repayment process is not always clear.

The process starts off with your loan servicer providing you with a schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment. The repayment plan may start after an established grace period, typically 6 months after graduation.

It’s best practice to know who your loan servicer is and to be in touch with them so that you know what options would work best for you.

1. Figure Out Who Your Loan Servicer Is

A loan servicer is the person at the company that owns your loan that they assign to handle the billing and other services on your student loan.

If you do not know who your loan servicer is, visit the studentaid.gov website or call the Federal Student Aid Information Center to find out.

2. Contact Your Loan Servicer

It is important to be in communication (typically via email or call) with your loan servicer to ensure you are on track with your repayment schedule. If you reach out, your loan servicer may be able to help with your repayment plan options so you don’t default on your loan.

It is also common that during repayment pauses, like what happened during COVID-19, your loan servicer may change. If such a pause happens again be sure to follow up with them.

3. Consider Loan Repayment Programs

Loan repayment programs reconfigure your monthly payments based on your income or family size, your specific career industry, and other factors. With many of these plans, you may be eligible for loan forgiveness after a certain number of payments. If you do not select a specific repayment plan, your loan servicer will likely add you to the Standard Repayment Plan, which could mean higher monthly payments for you.

Upon meeting the qualifications, some or all your student loan debt is forgiven or paid on the program's behalf.

It’s important to weigh all the loan options because not all the plans may fit with your financial goals. One option would be an Income Driven Repayment (IDR) plan, which determines your monthly payment based on your income and family size. After 20 or so years of consistent payments (depending on the plan), your remaining loan balance is typically forgiven.

One specific IDR option is the Saving on Valuable Education (SAVE) plan. If you qualify, the main benefit to this one is that you may be able to get the rest of your loan forgiven in as little as 10 years. This is a great option if you borrow around $12,000 or less.

The SAVE program is currently being disputed in several states, and the plan’s offerings may change in the future. Consult a financial professional or your loan servicer to discuss your options for student loan repayment.

The Bottom Line

With student loan and interest repayments having restarted in October 2023, it’s important to be in contact with your loan servicer so that you don’t miss a payment and can make sure the repayment plan you have is the best option for you.

Even though many student loans may not be forgiven, there are options to make sure monthly payments are within your budget and adhering to your financial objectives.

A great way to track your financial goals is to sign up for the Rocket Money^SM app. It can help manage your expenses and monthly bills, and keep you aligned with your goals.