Essential Student Loan Repayment FAQs: What You Need to Know

The federal student loan repayment prohibition ended in October, meaning that 28 million students had to start making debt repayments after three years without receiving any payments.

You might be looking forward to your loan due dates whether this is your first time paying off debt or you’ve been doing it for years.

On the other hand, you may get ready for student loan repayment by knowing when they will begin and what you can do to lower the amount you owe.

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Student Loan Repayment Begins

Federal student loan payments have been suspended since March 2020; no payments were expected, and interest rates on outstanding loans were momentarily set at zero percent.

The federal payment freeze ended on October 1, 2023, following multiple extensions, and borrowers are now required to resume loan repayment.

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Related: Essential Guide to Apply For Federal Student Loans

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FAQs Regarding Student Loan Repayment

When will student loan payments resume?

The federal student loan hold was gradually lifted. On September 1, 2023, interest on outstanding debts started to accrue.

Loan servicers reset accounts on October 1st, and payments were then due.

Find out when your first payment is due by contacting your loan servicer. Not all loans have due dates on the first of the month; instead, your payment due date varies depending on your loan terms and payment plan.

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Related: Private Student Loans Of July 2024

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What will happen to unpaid interest when payments restart?

Because interest rates on current federal student loans were fixed at zero percent for the previous three years, interest did not accrue. Interest rates will resume collecting at their previous levels now that the payment suspension is ended.

The Federal Student Aid Office states that in order to guarantee that your loans are repaid on schedule, your servicer might need to raise your monthly payment when interest builds up on your account.

Your payment amount under an income-driven repayment (IDR) plan is determined only by your disposable income.

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Am I eligible for the “on-ramp” period?

You are immediately qualified for the temporary on-ramp period if the payment freeze has affected any outstanding federal student loans.

The on-ramp period, which runs through September 30, 2024, mitigates the effects of late payments to give borrowers more time to become used to repayment. Missed, incomplete, or late payments won’t be reported to the credit agencies during this time.

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How do I calculate what I owe?

Use the loan repayment simulator tool to determine how much you owe or what your payments would be under the various possible repayment plans. To see how much you owe and when your payments are due, you can also get in touch with your loan servicer.

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Where do I make a payment on my student loans?

You will pay your loan servicer and the person you get in touch with when you have questions. The Consumer Financial Protection Bureau stated that approximately 40% of borrowers may have different loan servicers when repayment resumes, so it’s possible that your current loan servicer will be different from your previous one.

You must first ascertain which loans are handled by your loan servicers and who they are in order to manage your loans and make payments. You can accomplish this by logging into your account at studentaid.gov using your Federal Student Aid credentials. The Federal Student Aid Information Center’s number is 800-433-3243.

You may examine your loan data, set up automated payments, and create an online account once you’ve located your loan servicers.

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What happens if you don’t pay your student loans?

Generally speaking, being in default on your federal student loans is a major problem with long-term repercussions. When you don’t make payments on your loan, the loan servicer has the right to report negative activity to credit bureaus, garnish your income, confiscate your tax refund, and send your debt to collections.

However, the government is assisting debtors in easing into repayment by offering a “on-ramp period,” understanding that they may need some time to adjust as they haven’t made payments in three years. If they are able to, debtors are urged to make the necessary payments throughout this time. If, however, you are unable to make a payment on your student loans, the repercussions won’t be as dire.

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Student Loan Repayment Options and Loan Forgiveness

After their loans have begun to be repaid, more borrowers are looking into their options for student loan forgiveness, which is still a popular topic. Programs for federal loan forgiveness or discharge may be available to you, depending on your loan and kind of employment.

Do I still qualify for the cancellation of my student loans?

Federal loan debtors may still be qualified for alternative loan forgiveness programs even after the Supreme Court invalidated President Biden’s plan to cancel student loans.

Programs for federal loan forgiveness include:

• Repayment based on income: After 20 to 25 years of payments, borrowers enrolled in IDR plans who still owe money may be eligible for discharge of the outstanding balance.
• Loan forgiveness for public service (PSLF). Employees of nonprofit organizations and government agencies that work full-time for at least ten years for qualified employers and complete 120 monthly payments under a qualifying payment plan may be eligible for loan forgiveness for up to 100% of their outstanding debt.
• Teacher Loan Forgiveness: Between $5,000 and $17,500 in loan forgiveness is available to educators who serve for five full academic years in a row in low-income schools or education service organizations.

Because of the government payment freeze, if you are on a forgiveness-eligible payment plan, you will automatically be credited for the three years of suspended payments toward the total amount of payments required to be eligible for debt forgiveness.

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