As many of you know, most federal student loan borrowers have had their payments paused since March 2020 due to the COVID-19 emergency. This student loan relief has come to an end and will not be extended. The accrual of interest on federal student loans resumed on September 1, 2023, and loan payments will become due in October 2023.
We know that many of you, as well as members of your family, are student loan borrowers. We also know that the transition back to paying student loans may be challenging or confusing for some.
If you are a student loan borrower, here are 6 ways you can prepare:
1. Update your contact information with your loan servicer and at StudentAid.gov.
2. Review information about your next payment. This information can be found on your billing statement or by contacting your loan servicer.
3. Use the Federal Student Aid Loan Simulator to make sure you are on the best repayment plan, especially if your financial situation has changed.
4. Consider applying for, or switching to a new, income-driven repayment (IDR) plan. An IDR plan can make your monthly payment more affordable. Borrowers who consistently make monthly payments may see their debt forgiven after a certain number of years. The Biden administration recently announced as new IDR plan – Saving on Valuable Education (SAVE) – that will help more than 20 million American borrowers.
5. If you cannot afford a repayment plan right now, contact your loan servicer to discuss short term relief options, such as deferment or forbearance. Make certain you understand how these options may affect your loan, loan payments and eligibility for loan forgiveness under the Public Service Loan Forgiveness and IDR plans.
6. Understand what may happen if you don’t repay your loan. While delinquent payments can have a negative impact on your finances, the Biden administration has instituted a 12-month “on-ramp” period – October 1, 2023, to September 30, 2024 – to reduce the impact on borrowers who are not able to resume their loan payments immediately. During this period, borrowers will not be considered delinquent, be reported to the credit bureaus, placed in default, or referred to debt collection agencies. However, borrowers should be aware that delinquent loan payments will continue to accrue interest and may impact when you qualify for loan forgiveness under the Public Service Loan Forgiveness program or an IDR plan.
Our union wants to make sure you have the resources you need to successfully restart your loan payments. Visit AFSCME’s Student Debt Resources for additional and updated information, including information about the new SAVE plan and the 12-month repayment “on-ramp” period.