FAQ: How to Prepare for the End of the Student Loan Repayment Pause

• Interest began accumulating on federal student loans again in September 2023.
• Approximately 28 million borrowers must now begin repaying their debts or consider other options.
• For those who cannot afford the repayment, experts encourage borrowers to explore income-driven repayment (IDR) plans.

The three-year pause on federal student loan repayment is officially over, leaving approximately 28 million borrowers with an expense they haven't had to consider since early 2020.

Interest began accumulating on these loans again on Sept. 1, and the first payment for most borrowers will be due in early October. President Joe Biden could not legally extend the pause any further, putting an end to a three-year-long moratorium on loan payments.

Meanwhile, the U.S. Supreme Court axed the president's one-time debt forgiveness plan.

BestColleges spoke with student loan experts to answer burning questions borrowers may have about the end of the pause, how they should prepare, and what roadblocks they should anticipate. Those experts included Carolina Rodriguez, director of the Education Debt Consumer Assistance Program (EDCAP), and Betsy Mayotte, president and founder of the Institute of Student Loan Advisors (TISLA).

What Should I Do First to Prepare?

Rodriguez of EDCAP said the most important thing borrowers should do first is identify who their loan servicer is and make sure their contact information is up to date.

In the three years since the pause, nearly half of federal student loan borrowers have had their servicer changed, she said. It's likely that many don't even know that this has happened since they haven't needed to make payments, especially if their previous servicer had an outdated email or mailing address.

Rodriguez said each borrower's loan servicer is viewable on their dashboard at the Federal Student Aid website.

If the borrower's servicer has changed, they'll need to make a new account with their servicer. Even if the servicer is the same as before the pause, she recommends double-checking the contact information on file.

As people try to make their first payment, she added, borrowers will flood the Federal Student Aid (FSA) website, so it's better to update all your information sooner rather than later.

I can imagine the FSA website will crash somehow, Rodriguez said.

How Do I Know if I Can Afford My Monthly Payment?

Mayotte of TISLA said there's no one-size-fits-all approach to determining how affordable someone's loan payment is.

There isn't a rule of thumb because people have different financial responsibilities and different goals, she said.

Borrowers should sit down, look at their budget, and determine their financial goals, Mayotte said. Then they should plug in their monthly loan payment to determine whether this added expense will allow them to stay within their budget and still reach those goals.

Rodriguez said borrowers should be able to see their first bill on their servicer's website.

That viewable bill, however, may be for the standard 10-year repayment plan. If a borrower was on an income-driven repayment (IDR) plan before the pause, Mayotte said there are student loan calculators that can help them determine what their monthly payment would be on an IDR plan versus the 10-year plan.

TISLA has one such calculator.

Can I and Should I Enroll in IDR Now?

Using a calculator and comparing the monthly bill under different IDR plans should help borrowers determine whether IDR is right for them.

It's important to remember that federal student loans aren't forgivable under an IDR plan until 20-25 years of continual repayment, depending on the plan. Mayotte added, however, that even if borrowers enroll in IDR, that doesn't commit them to being on IDR forever.

She recommends borrowers reevaluate which plan is best for them yearly during tax season.

The name of the game isn't forgiveness, Mayotte said. The name of the game is paying the lowest amount over time.

It's not too soon for borrowers who decide IDR is best for them to enroll. She shared Rodriguez's concern that the FSA website may experience delays now that the pause has ended, so early action is encouraged. Borrowers should also expect long hold times if they aim to enroll in IDR over the phone in October.

Rodriguez added that it's also never too late to enroll in IDR.

Borrowers who viewed their first payment bill on Sept. 1 and realized it's unaffordable can immediately enroll in IDR. Their bill will change to whatever the IDR calculation is instead.

President Biden's proposed new IDR plan, which will replace the Revised Pay As You Earn (REPAYE) plan, is partially live. The White House recently announced that nearly one million borrowers applied to enroll in the new Saving on a Valuable Education (SAVE) plan over the summer.

What if I Can't Afford Any Repayment Plan?

Rodriguez said that while IDR will be an affordable option for many, monthly payments still might not be low enough for others — especially those with Parent PLUS loans.

In these cases, she said borrowers should look into applying for a loan deferment through their servicer. Forbearance is another option, but deferment is the preferred solution, she said.

Still, she says both these options should be considered a last resort.

I'm really stressing that it really should be short-term, Rodriguez said. I don't want to push the narrative to look into forbearance or deferment. It's too easy to get comfortable with it.

These options are helpful in situations where somebody is changing jobs, for example. But the goal should be to get back on a repayment plan as soon as possible because interest may continue to accrue while on deferment or forbearance.

Rodriguez said loan servicers often try to steer borrowers toward forbearance, even if IDR is the best option. That's why it's doubly important that borrowers closely examine whether IDR is better for them before applying for deferment.

Forbearance and deferment may not be necessary for the first year.

The White House announced that it will not mark past-due loans as delinquent or in default for the first 12 months after the pause on payments lifts. Interest will continue to accrue on loans, but borrowers will not be penalized for missing payments from Oct. 1, 2023, to Sept. 30, 2024.

Additionally, most borrowers who made federal student loan payments during the payment pause can request a refund.

Federal Student Aid (FSA) stated that borrowers can contact their loan servicer to request a refund of payments made between March 13, 2020, and Aug. 28, 2023. FSA added that this applies to “most” payments, but borrowers who have a Direct Consolidation Loan cannot get refunds on payments made before consolidating.

If I Was Previously on IDR, When Must I Recertify My Income?

Both Rodriguez and Mayotte said borrowers don't have to recertify their income before the pause ends if they are already enrolled in an IDR plan.

Many borrowers likely have a different income now than when the pause started in March 2020.

Borrowers with a lower income now than before March 2020 should recertify their income now. This will likely give them a lower payment exiting the pause.

However, those with a higher income now should wait. Mayotte said servicers will reach out to borrowers once it is time to recertify, and they will likely do so with a staggered rollout. By waiting to hear from a servicer, borrowers can stay with a lower monthly payment for as long as possible.

Federal Student Aid (FSA) announced in August that the earliest borrowers will be asked to recertify their incomes is March 1, 2024.

Some borrowers, however, may see a recertification date earlier than that on their “My Aid” page, FSA said. If that’s the case, the listed recertification date will be pushed back one year. That means if your account says you need to recertify by Dec. 1, 2023, that will be pushed to Dec. 1, 2024.

Any listed dates after March 1, 2024, will remain as is.

Will There Be a Grace Period?

Mayotte cautioned against referring to any leniency in student loan collections as a grace period, as this term describes the six months post-graduation that borrowers do not need to make loan payments.

However, she added that many in the student loan space predict that the Department of Education (ED) won't immediately penalize borrowers who are late on payments once the pause is lifted. While it won't be a grace period, she said borrowers likely won't see their credit scores decrease if they slip into delinquency by not paying their loans on time.

The White House later confirmed these suspicions.

Borrowers will not be penalized for missing payments for the first 12 months that payments are due. That means that from Oct. 1, 2023, to Sept. 30, 2024, borrowers who skip payments won't see their loans placed into default. And missing payments won't impact a borrower's credit score.

However, interest will continue to accrue on debts during this period.

What Is the Fresh Start Program, and Will It Benefit Me?

Fresh Start is an ED initiative that allows borrowers with defaulted loans to become in good standing with the government again.

When borrowers are more than 270 days past due on their federal student loans, they enter default. This status means they can no longer access federal financial aid, and the government has the power to forcibly collect on debt through means like wage garnishment.

Borrowers must fill out an application to benefit from Fresh Start.

Mayotte said this has been a point of confusion for many borrowers in recent months. She said some borrowers think it's a trap to get them to begin repayment again, but in reality, the government only stopped forcibly collecting on the debt due to the payment pause. Borrowers in default before the COVID-19 pandemic will again see their wages garnished unless they apply for Fresh Start within 12 months of the pause's end.

There is a very limited window, she said.

According to FSA, it takes four to six weeks for most people to see their loans transferred to a non-default servicer after submitting their Fresh Start application.

How Can I Avoid Scams?

Mayotte said scammers will use the end of the payment pause to try to defraud borrowers.

For scammers, she said, this is Christmas, Easter, and Arbor Day all rolled into one.

She reminds borrowers that ED will never force borrowers to pay for any changes to their loans, enroll in any repayment plan, or expedite the application process for a program like Fresh Start. Any company that claims it can move borrowers to the front of the line is lying.

Enrolling in a repayment plan is also free and can be done alone, either online or by calling a loan servicer.

What Should I Expect After the Pause Ends?

The student loan system is not designed to accommodate millions of borrowers entering repayment simultaneously.

Mayotte stresses this fact to remind borrowers that there will almost certainly be hiccups in the coming months. Call centers for loan servicers will likely have long hold times, and applications for programs like Fresh Start or to enroll in an IDR plan will probably be held up longer than average.

Borrowers should be prepared to be patient, she said.

Rodriguez recommends borrowers fill out any applications and plan their resumption of loan payments as soon as possible to avoid being caught up in the flood in October and September.