Student loan payments are set to restart in October 2023. Here's what you need to know and how to prepare.
The federal student loan payment pause that was put in place during the pandemic is officially coming to an end. As of September 1, 2023, federal student loans will start accruing interest again, and payments will resume in October 2023.
This is a significant change for the nearly 45 million Americans who've enjoyed a break from their student loan payments. For the past three years, students have been able to forgo making payments on their loans, and interest has been paused. This has provided much-needed relief to borrowers but has also come at a cost.it's estimated that around $185 billion in student loans would have been repaid if not for this hiatus.
As of September 1, 2023, federal student loans will start accruing interest again, and payments will resume in October 2023.
What Does This Resumption Mean for Borrowers?
So, what does this mean?
- Interest will start accruing again on September 1: This means that if you don't make a payment on your loan by then, you will start accruing interest on the unpaid balance.
- Payments will resume in October: Payments are set to restart in October. The Department of Education will announce the exact date, but you can find your specific due date in your account details with your loan servicer.
- You can still make payments on your loan before the payment pause ends: If you're eager to reduce your debt, you can start making payments even before the official end of the payment pause.
If you are struggling to afford your student loan payments, there are a few things you can do:
- Refinance your loans. If you have private student loans, you may be able to refinance them at a lower interest rate. This could make your monthly payments more affordable.
- Deferment or forbearance. If you are unable to make your payments, you may be able to request deferment or forbearance. This will temporarily suspend your payments and interest accrual.
- Income-driven repayment plans. If you have federal student loans, you may be eligible for an income-driven repayment plan. These plans cap your monthly payments at a percentage of your income.
Remember, neglecting your student loan payments can have repercussions, like affecting your credit score or having your loans sent to collections. Consulting a financial advisor can be beneficial if you're uncertain about managing your student loan payments.
Steps to Take to Pay Back Student Loan Debt
Here are a few steps you can take to pay back your student loan debt:
- Create a budget. This will help you track your income and expenses so you can see how much money you have available to pay toward your loans.
- Make a plan. Decide how much you want to pay towards your loans each month and stick to it.
- Consider refinancing. If you have private student loans, you may be able to refinance them at a lower interest rate. This could make your monthly payments more affordable.
- Take advantage of income-driven repayment plans. If you have federal student loans, you may be eligible for an income-driven repayment plan. These plans cap your monthly payments at a percentage of your income.
- Make extra payments when you can. If you have the extra money, consider making extra payments on your loans. This will help you pay them off faster.
The student loan payment pause is coming to an end, and borrowers need to start preparing for the resumption of payments in October. There are a few things you can do to get ready, such as creating a budget, making a plan, and considering refinancing your loans. If you are struggling to afford your payments, there are also a number of options available to you, such as deferment, forbearance, and income-driven repayment plans. It is important to take action now so that you are prepared when payments resume.