What You Need to Know Now That Student Loan Payments Are Back

After a long pause, federal student loan payments have resumed. For many, this shift feels overwhelming. Budgeting will change, interest is building again, and those in default may now face collection activity. If you’re unsure where to start, you’re not alone. Here’s what you need to know to navigate this transition smoothly.

Student loan Payments Have Resumed And Interest Is Accruing Again

During the payment pause, interest rates were set to 0%. That relief ended in September 2023. Currently, interest is again accruing on your federal student loans. Your total balance may grow if you don’t make full monthly payments.

Interest rates vary depending on your loan type and when you borrowed it. You can check your loan details by logging into your account at studentaid.gov. Knowing your current interest rate is essential for budgeting and deciding on a repayment strategy.

Know Your Repayment Options

One of the most important steps is choosing a repayment plan that fits your current financial situation. If you simply resume the standard plan, you’ll have fixed monthly payments over 10 years. But that’s not the only option.

If your income is lower or you face financial hardship, you may want to look into income-driven repayment (IDR) plans. These plans calculate your monthly payment based on your income and family size, and they can be as low as $0 if you qualify. There are several types of IDR plans, including the newer SAVE plan (Saving on a Valuable Education), which offers even more generous terms than previous options.

Preparing Your Budget

Start by reviewing your current budget. Identify how much you can reasonably afford to put toward your monthly student loan payments. It might require cutting some non-essential expenses or adjusting how you save.

If you could put payments on hold for the last few years, now’s the time to act like those payments are back on the table—even if you haven’t received a bill yet. Setting aside that amount now can help you ease into the change.

Make sure your loan servicer has your current contact information. Many servicers have changed during the pause, so you may need to create a new online account.

What If You Can’t Pay?

Don’t ignore the issue if you’re already feeling behind or anxious about affording payments. The worst thing you can do is nothing.

There are short-term options like deferment or forbearance, but these typically don’t stop interest from growing. Income-driven plans are usually the better long-term approach. Also, the Department of Education has temporarily rolled out a 12-month “on-ramp” period through September 2024. During this time, missed payments won’t be reported to credit agencies or lead to default, but interest will still accrue.

Take Action Before Collections Start

If you were in default before the payment pause, you may be eligible for a fresh start through the government’s “Fresh Start” program. This initiative gives you a second chance by moving your loan out of default and back into good standing, but you must opt in.

Ignoring collections or default notices can lead to wage garnishment, tax refund seizures, or other legal consequences. Act now to avoid those outcomes.

Getting back into the rhythm once student loan payments have resumed isn’t easy. But you have options—and the sooner you act, the more control you’ll have over the situation.

If you’re unsure about dealing with resumed payments, default, or collection activity, it may help to talk to someone who understands the legal and financial implications. The Law Offices of Robert M. Geller can help you understand your options and protect your financial future. Don’t wait until the situation becomes urgent—reach out today for guidance.