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When Do Student Loan Payments Start Again?

Last updated 03/15/2024 by

SuperMoney Team

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The end of the federal student loan payment pause marks a significant transition for borrowers, with resumed payments and accruing interest from September 2023. Amidst this shift, President Biden proposes a new plan for student loan forgiveness, targeting a broader range of borrowers and aiming to alleviate the financial burden for those facing hardships. This proposal, however, faces potential legal challenges and uncertainties, highlighting the ongoing debate and efforts to reform student loan repayment and forgiveness.
The pause on federal student loan payments, which lasted for over three years, has come to an end. Interest on student loan balances resumed on September 1, 2023, with the billing cycle kicking off again in October 2023. To determine your bill’s exact due date, you should contact your student loan servicer or log into your online account.
If you didn’t make your payment in October 2023, there’s a fallback option available: the 12-month student loan “on-ramp” program. From October 1, 2023, to September 30, 2024, missing payments won’t lead to default, although interest will continue to accumulate, increasing your total debt. President Joe Biden, addressing the issue in a June press conference following the Supreme Court’s decision to block his student debt cancellation proposal, advised, “If you’re able to, you should continue to pay your monthly bills.” However, if you’re unable to make payments, this on-ramp provides temporary protection against default and credit damage, which can have long-lasting repercussions for borrowers.

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When do you need to start repaying federal student loans?

Interest on federal student loans resumed on September 1st, 2023. If you’re not within your post-graduation grace period, the initial set of payments post-pandemic hiatus was expected in October 2023. The specifics of your monthly payment and its due date are outlined in your loan agreement, accessible through your monthly statement, by reaching out to your loan servicer, or by checking your online account.
Impact of the payment hiatus Initiated in March 2020 by then-President Donald Trump as a pandemic relief effort, the student loan forbearance halted interest accumulation and allowed borrowers to defer payments without penalty. This forbearance was extended nine times, lasting over three years, during which autopayments were suspended, and no action was taken on defaulted loans.

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Strategizing your repayment plan

Preparing for loan repayment with repayment processes back in motion, it’s crucial to strategize your repayment plan:
  1. Identify your loan servicer, as it may have changed during the forbearance period. Access to discover your current servicer.
  2. Reach out to your servicer to confirm your contact details, inquire about your upcoming payment amounts, and explore available repayment options. Enrolling in autopay might reduce your interest rate by 0.25%.
  3. Consider enrolling in an income-driven repayment (IDR) plan, which adjusts your monthly payments to a manageable portion of your income, potentially reducing them to $0. Apply early to ensure your repayments are adjusted in time for the resumption of payments.
  4. The SAVE plan, introduced by President Biden on June 30 as a replacement for the REPAYE plan, offers substantial savings for eligible borrowers. Utilize the federal loan payment simulator to compare plans and apply for SAVE online.
  5. For loans in default before the pause, the Fresh Start program offers a chance to restore them to good standing.

Is my student loan forgiveness in jeopardy?

The future of widespread student loan forgiveness is currently uncertain. The Supreme Court halted President Joe Biden’s plan for student debt forgiveness in June, determining that his administration did not have the authority under the HEROES Act to cancel up to $20,000 per borrower.
Despite this setback, Biden is exploring alternative legal avenues to achieve student debt cancellation. However, this process is expected to be lengthy, potentially taking a year or more, and its success is not guaranteed, according to experts. In the meantime, borrowers are advised to continue making their loan payments.
Additionally, borrowers who have been making payments on their federal student loans for 20 or 25 years may be eligible for loan forgiveness through a separate, one-time Income-Driven Repayment (IDR) program.

Is the student loan forgiveness finished? Biden’s new proposal

After the Supreme Court thwarted President Joe Biden’s initial attempt at broad student loan forgiveness, a new proposal has emerged, targeting borrowers facing financial hardships, those with older loans, and individuals burdened by significant interest accumulation. This second attempt at cancellation expands eligibility to include a broader spectrum of borrowers, responding to advocacy and Democratic pressure for more inclusive relief measures. However, the proposal’s future remains uncertain as it enters a lengthy rulemaking process, with conservative opposition poised for legal challenges.

Eligibility and relief under the new plan

The latest proposal introduces automatic relief for borrowers at high risk of defaulting within two years, considering various factors like income, unavoidable expenses, and loan balance. Additionally, it proposes interest relief up to $20,000 based on income levels, aiming to reset borrowers’ balances to their original loan amounts. For long-term borrowers, those repaying for 20 or 25 years could see their remaining balances completely erased, offering a lifeline to those who have been entangled in debt for decades.

Expanding forgiveness and addressing low-value programs

Beyond individual relief, the proposal seeks to automatically cancel loans for borrowers eligible under existing income-driven repayment plans or other targeted forgiveness programs, simplifying access to relief for those unaware or unable to navigate the application process. It also targets for-profit college programs that fail to provide graduates with sufficient earnings to manage their loan repayments, proposing to cancel loans for those affected. This comprehensive approach reflects an effort to address systemic issues within higher education financing and provide meaningful relief to burdened borrowers.

Key takeaways

  • The federal student loan payment pause has ended, with interest accruing from September 1, 2023, and payments resuming in October 2023.
  • A 12-month “on-ramp” program from October 1, 2023, to September 30, 2024, allows borrowers to miss payments without defaulting, though interest will accumulate.
  • President Biden’s new student loan forgiveness proposal targets borrowers facing financial hardships, with specific relief for those with older loans or significant interest, despite uncertainty around its implementation.
  • The proposal also aims to automatically cancel loans for eligible borrowers under existing income-driven repayment plans or targeted forgiveness programs, addressing systemic issues in higher education financing.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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