Federal student loan borrowers have enjoyed a payment pause for the last few years, as part of the federal government’s way of dealing with the economic fallout of the pandemic. With interest set to accrue soon, and required payments following shortly after, federal student loan borrowers should prepare for this change to their financial situation.
Let’s explore when federal student loan payments will resume, when interest will start to accrue, and how borrowers can prepare for these coming changes.
Federal Student Loan Payments Set to Resume Soon
Federal student loan payments were first paused in 2020 in response to the pandemic’s economic impact. Since then, several extensions have given federal student loan borrowers the option to forgo payments during a nationwide pause on federal student loan payments and interest accrual.
But the extensions have come to an end. Federal student loan borrowers will see their student loans start to accrue interest again starting on September 1, 2023. Next, borrowers can expect payments to be due in October.
How to Prepare for Federal Student Loan Payments
The reprieve offered to federal student loan borrowers is coming to an end. If you have federal student loan debt, now is the time to prepare for payments to resume. It’s best to get ahead of the situation to make sure your finances are ready for this major change.
Below is some of the legwork you’ll want to consider as payments resume:
- Update your contact information: It’s been years since you were required to make federal student loan payments. Take a minute to check that your contact information is updated on StudentAid.gov and with your loan servicer. Accurate contact information will make sure you get all of the information you need to start making on-time payments.
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- Look at your payment options: If the standard student loan payment doesn’t fit into your budget, consider income-driven repayment (IDR) plans. Although the details of these plans vary, the end result is a lower monthly payment based on your income and family size. For many student loan borrowers, this lower payment can give them the breathing room they need in their budget.
- Determine your monthly payment amount and deadline: The bill you receive in September should indicate exactly how much you owe and when your payment is due. If you run into questions, reach out to your student loan servicer.
- Consider autopay: Making on-time payments to your student loans isn’t always easy to remember. If possible, set up automatic payments to avoid accidentally missing a payment.
- Reach out if you have questions: Every student loan borrower has a slightly different financial situation. It’s natural to have questions. Your student loan servicer should be able to provide the answers you need.
- Explore forgiveness options: Many federal student loan borrowers qualify for forgiveness options. Take some time to explore all of the available forgiveness programs to see if you qualify. If you do, that could dramatically change your financial situation.
If possible, set up automatic payments to avoid accidentally missing a payment.
The Bottom Line
As you prepare for student loan payments to resume, understanding your options can have a big impact. The good news is that a proactive approach to student loan payments will allow for a smooth transition into this new chapter of your finances.
If you have private student loans, then refinancing could help you lock in a payment that fits your budget. Explore your student loan refinancing options today.