Student loan payments resume in a matter of weeks. And borrowers are contending with a slew of overlapping deadlines to monitor.
The Biden administration has been communicating to borrowers the importance of preparing for the return to repayment. The student loan pause is actually, really ending this time, after over half a dozen short-term extensions by former President Trump and then President Biden, often issued at the last minute.
But the sheer volume of dates and tasks to keep track of may lead to confusion or missteps. Several of these critical deadlines are coming up within days or weeks. Here’s a breakdown.
Key August Deadlines As Student Loan Pause Ends And Payments Resume
The student loan pause — which has suspended monthly payments and frozen interest since March 2020 — officially ends on August 31. After that, interest will start accruing again. The first billing statements will be generated in the following weeks, with the first due dates in October.
The Education Department recommends that borrowers take several actions before the end of August:
- Check to see if your student loan servicer has changed. Up to 30 million borrowers have a different loan servicer now than they had when the student loan pause first went into effect over three years ago. Major federal student loan servicers like Navient, FedLoan Servicing, and Great Lakes Higher Education are no longer part of the Department of Education’s federal student loan servicing system. Borrowers can get information on their current loan servicer at StudentAid.gov.
- Update your contact information to ensure that you receive important student loan correspondence, including billing notices as student loan payments resume. Make sure your contact information is correct on both StudentAid.gov and with your current loan servicer.
- Evaluate your repayment plan options. Borrowers who need to apply for an Income-Driven Repayment, or IDR, plan, and borrowers already on an IDR plan who need to change plans or request a recalculation of their payment, should submit their request before the end of August to ensure the request is process by the time student loan payments resume. Borrowers may also want to consider the new SAVE plan that was just announced by the Biden administration.
- The Education Department has indicated that the month of September will be an administrative forbearance, during which no payments will be due, but interest will accrue. The department has not made clear whether this month will count toward student loan forgiveness under IDR and the Public Service Loan Forgiveness, or PSLF, program. Borrowers who are concerned can opt out of the administrative forbearance and begin repayment their student loans in September, but they need to notify their loan servicer before the end of August.
- Borrowers who were previously enrolled in auto-pay in 2020 will probably not have their student loan payments automatically deducted from their bank accounts when payments resume. Most borrowers will need to re-enroll in auto-pay before the end of August by contacting their loan servicer.
In addition, if you are one of the 800,000 borrowers who were notified in July that you qualify for student loan forgiveness under the IDR Account Adjustment, you have only until August 13 to opt out of that loan forgiveness. Most borrowers would not want to opt out, but some might want to do so for strategic reasons, such as possible state income tax consequences associated with loan forgiveness, or a pending consolidation application.
Subsequent Important Dates After Student Loan Payments Resume
The important dates to keep track of don’t end in August. Borrowers should note further critical deadlines after the student loan pause officially ends:
- Interest will start accruing again on September 1st. Most federal student loan interest rates are fixed at the loan’s original disbursement, and will return to those rates. New interest accrual and capitalization rules that will benefit borrowers are now in effect, but this won’t stop interest from accruing in most cases.
- Student loan payments will be due starting in October, although actual billing due dates will vary.
- Borrowers who need to consolidate their loans to qualify for, or maximize benefits under, the IDR Account Adjustment, need to do so by December 31, 2023. In addition, borrowers on track for PSLF who are seeking credit under the flexibilities of the IDR Account Adjustment should submit a PSLF employment certification by this date, as well.
- Borrowers who have been on an IDR plan will not be asked to re-certify their income for at least six months after the payment pause ends, according to Education Department guidance. Those who have not updated their income since 2020 should anticipate being notified about IDR income recertification obligations in early 2024.
- The Biden administration has enacted 12 months of flexibilities after the student loan pause ends. This includes an on-ramp period, during which borrowers won’t be penalized through negative credit reporting or late fees for missing payments (although missed payments won’t count toward student loan forgiveness under IDR or PSLF). In addition, borrowers in default will be shielded from collections efforts and will have a pathway to get out of default through the Fresh Start program. But these flexibilities will disappear by August 2024.
Other Student Loan Forgiveness And Student Loan Pause Developments
Borrowers don’t just have critical dates and deadlines to keep track of. Other legal developments could scramble plans or block access to certain initiatives.
Last week, several conservative groups filed a lawsuit to block implementation of the IDR Account Adjustment; the Biden administration had already notified over 800,000 borrowers that they qualify for student loan forgiveness under the program. And this week, the 5th Circuit Court of Appeals issued a nationwide injunction blocking new regulations for Borrower Defense to Repayment, a federal student loan forgiveness program for borrowers defrauded by their school.
Further Student Loan Forgiveness Reading
Student Loan Pause Extension? New Proposal Would Eliminate Interest For Current Borrowers
Student Loan Forgiveness Just Got Easier For These Borrowers
5 Student Loan Forgiveness Updates As Payments Resume In A Matter Of Weeks
Here’s When The Next Student Loan Forgiveness Notifications Will Go Out
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