Tips for the Return to Repayment

Federal Student Loan Payments Restart after August 31, 2022.

The COVID-19 emergency relief for federal student loans ends August 31, 2022. Here are some tips on preparing for loan payments to resume.

Table of Contents

Update your contact info with your loan servicer

Make sure your contact information is up to date in your profile on your loan servicer’s website. If your contact information is outdated, you could miss out on important information.

Set up and/or update your studentaid.gov account

Studentaid.gov is the U.S. Department of Education’s main website for federal student loans and your portal to access information about all of your federal student loans. You can use your studentaid.gov account to apply for repayment plans, consolidate your federal loans, explore repayment plans with the Loan Simulator, and use the Public Service Loan Forgiveness Help Tool. You’ll be prompted to sign in with your Federal Student Aid (FSA) ID. If you don’t have an FSA ID, you should make one. If you haven’t logged into your studentaid.gov account recently, you should log in to make sure your contact information is up to date.

Get details on your upcoming payment

Your payment amount may have changed. Call your servicer or log in to its website to find out your upcoming payment amount and due date. Once the payment pause ends, your loan servicer will send you a billing statement. Your payment will be due no sooner than 21 days after your servicer sends the billing statement.

Restart your auto-debit

Even if you were on auto-debit before the start of the payment pause, you may still need to reenroll in auto-debit. Contact your loan servicer to restart auto-debit, sign up for auto-debit for the first time, or find out other easy ways to make a payment. Direct Loan borrowers who enroll in auto-debit receive a 0.25% interest rate reduction.

If you work in public service, make sure you’re on track for Public Service Loan Forgiveness

If you work for the government or nonprofit organization, learn about the Public Service Loan Forgiveness (PSLF) Program, including the recently announced PSLF limited waiver opportunity. For a limited time, borrowers with qualifying employment may receive credit towards PSLF for past repayment periods that would not otherwise count towards forgiveness. However, in many cases, borrowers will need to take action by October 31, 2022 to qualify for a review under the limited waiver and maximize potential benefits.

Find out if you’re on the best repayment plan for you

Your situation may have changed during the pandemic. Now is a great time to think about whether you’re on the best repayment plan for you. The U.S. Department of Education offers a variety of repayment plans.  If you’re struggling, consider an income-driven repayment plan.

Income-driven plans calculate your payments based on your income and family size. Under an income-driven plan, payments may be as low as $0 per month. Income-driven plans also offer the possibility of loan forgiveness after 20 or 25 years of qualifying payments and can provide valuable interest subsidies. Use the U.S. Department of Education’s Loan Simulator to explore your payment options.

Take action if you want to lower your monthly payment

After learning about your repayment options, you can apply for a specific repayment plan or ask to be placed in the income-driven plan that results in the lowest monthly payment.  

  • Can I get my income-driven payment amount recalculated based on a change in my financial circumstances? If you previously enrolled in an income-driven plan but experienced a loss of income or increase in family size, you may qualify for a new lower payment amount due to your changed financial circumstances.
  • How do I apply for an income-driven plan or ask for recalculation? You can apply for income-driven repayment or request recalculation of your monthly payment amount either online or by mail. Additionally, for at least several months after repayment resumes, borrowers whose loans were covered by the COVID-19 payment pause can apply or request recalculation by calling their federal loan servicer.
  • What is self-certification of income? Until February 28, 2023 Direct Loan borrowers can “self-certify” their income when applying for income-driven repayment or asking for recalculation, meaning that they can report their income without having to submit tax returns or alternative documentation of income. This will make it even easier to apply for income-driven repayment or request recalculation of your payment amount. 

Ways to Apply for Income-Driven Repayment or Request Recalculation

Online

Use or create your FSA ID to apply for income-driven repayment or request recalculation of your monthly payment on the U.S. Department of Education’s studentaid.gov website

Mail

Submit an Income-Driven Repayment Plan Application to your federal loan servicer to apply for income-driven repayment or request recalculation of your monthly payment amount.

Phone

If all your loans were covered by the COVID-19 payment pause, you can call your servicer and ask to apply for income-driven repayment or have your payment recalculated over the phone. This option will end on February 28, 2023.

  • When do I have to annually recertify my income and family size information? Borrowers who enroll in income-driven plans must recertify their income and family size information each year. However, if you enrolled in an income-driven plan before the start of the payment pause, you will not be asked to recertify until at least March 2023.
  • Can I consolidate to lower my monthly payment? Consolidating your federal student loans may lower your monthly payment. However, you should consider the pros and cons of consolidation before deciding if consolidation is right for you. Because consolidation typically extends your repayment term, it usually increases your total loan costs.  

However, in some cases, consolidation can help you access more affordable income-driven repayment plans and/or the Public Service Loan Forgiveness (PSLF) Program. For example, borrowers with Federal Family Education Loans must consolidate into the Direct Loan Program to access Public Service Loan Forgiveness and more favorable income-driven repayment plans like REPAYE. Parent PLUS loan borrowers must also consolidate into a Direct Consolidation Loan to access income-driven repayment and PSLF.

You can apply for consolidation at studentaid.gov.

As a last resort, ask your servicer for short-term relief

If you can’t find a repayment plan that works for you, you can request to temporarily pause or lower your payments through deferment or forbearance. Keep in mind that interest accrues on unsubsidized loans during deferment and on both subsidized and unsubsidized loans during forbearance and unpaid interest capitalizes. This means your balance and total loan cost will increase. Before requesting a deferment or forbearance from your loan servicer, use the Loan Simulator to learn how this short-term relief affects your loans and payments.

Enrolling in an income-driven plan is typically a better option than using deferment or forbearance. This is because most income-driven plans offer interest subsidies if your scheduled payment amount does not cover the interest that accrues on your loan. The REPAYE plan offers the most generous interest subsidies. Specifically, under REPAYE:

  • On subsidized loans, you do not have to pay the difference between your monthly payment amount and the interest that accrues for your first three consecutive years in REPAYE.
  • On subsidized loans after these first three years and on unsubsidized loans during all periods, you only have to pay half the difference between your monthly payment amount and the interest that accrues.

Understand what happens if you don’t repay your loan

If you miss a payment, your loan becomes delinquent. Once your loan is delinquent for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. Delinquency will harm your credit score, making it harder to get credit. Paying late also costs you money. Because interest continues to accrue on your loan each day, if you pay late, more of your payment will be used to pay your accrued interest and less will go towards reducing your principal balance.

Once your loan is 270 days past due, it goes into default. When you default on a federal student loan, your tax refund can be seized and part of your paycheck or Social Security benefits can be taken. The default status will further damage your credit score and you’ll also lose access to federal student aid.

Avoid scams

Student loan “debt relief” companies charge fees for helping federal student loan borrowers to enroll in income-driven repayment plans, consolidate loans, or get out of default.  There is nothing these companies can do for you that you can’t do on your own for free.

Some of these companies are presently trying to take advantage of circumstances related to the pandemic and government relief packages. If someone contacts you and asks for personal information or money to suspend your student loan payment—it’s a scam.  Scammers may also claim you are eligible for immediate loan forgiveness through “Biden Loan Forgiveness” or “CARES Act Loan Forgiveness.” These programs do not exist. Loan forgiveness or discharge of student debt is rare, so if someone promises immediate loan forgiveness—it’s almost certainly a scam. Learn more about the other warning signs of a debt relief scam.

Additional Resources

U.S. Department of Education’s COVID-19 Emergency Relief and Federal Student Aid: Learn how to prepare for loan payments to begin again. You can also find information about COVID-19 relief, impacts, and other resources.

U.S. Department of Education’s Returning to Repayment Fact Sheet: Quickly review key information to help prepare for student loan payments to restart.

U.S. Department of Education’s COVID-19 Relief: Income-Driven Repayment Plan Page: Learn about how the COVID-19 emergency relief has affected income-driven repayment and what to expect when loan payments begin again. 

Consumer Financial Protection Bureau’s Prepare to Repay Page: Learn more about how to prepare for repayment and your options if you can’t afford your payments, including private loan payments.

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