Federal Student Loan Payments Resume

In response to the COVID-19 public health emergency, payments and interest on federal student loans were paused in March 2020. Following eight total extensions by two US Presidents and the Supreme Court ruling against the Administration’s student loan forgiveness plan, payments are set to resume on October 1, 2023.

• More than 28 million borrowers are expected to resume payments in October. Many borrowers have submitted payments ahead of due dates, evidenced by the rise in daily deposits recorded by the US Department of Education.
• Experts worry about the impact of repayments on the national economy as well as the ability of borrowers to pay, in particular because more than half of borrowers have added new debt during the pandemic.
• To ease the transition, the US Department of Education has established a one-year “on-ramp” period to spare borrowers from immediate consequences for missed payments. The Department also developed a new income-driven repayment plan, the SAVE Plan, to help borrowers maintain affordable payments.
• Borrowers with delinquent loans have access to a one-time Fresh Start program to restore good standing and access to other benefits that may result in reduced payments or loan forgiveness.
• Loans have been cancelled for approximately 800,000 borrowers who were enrolled in income-driven repayment plans as a result of the Department’s attempt to correct past calculating errors.