Student Loan Repayments Start in October - Here's What You Need to Know

• Author: Martha Stanton
• Posted: 2024-05-21

Millions of Americans have been enjoying a reprieve in making payments on their student loans. However, that is all about to change shortly as the three-year pause that was put into effect during the height of the COVID-19 pandemic will come to an end. The student loan repayment program is set to begin again in October, meaning that borrowers could have to make their first payment in as little as one month. It is important to note that there have been some changes to this lending system. Here are a few ways that the system has changed during the pandemic.

 

New Service Provider for Some Borrowers

There have been a number of changes to the slate of federal student loan providers since the last time that borrowers had to make a payment. Several lenders that used to manage this debt for the federal government ceased to do so during the pause on payments over the course of the pandemic. This includes major providers such as Navient and Granite State. As a result, millions of borrowers will find that their accounts have been transferred to different providers.

You should expect to receive an email about any changes to your provider. The email will detail any next steps that you need to take in order to ensure interrupted service. For instance, previous borrowers with Navient are now being serviced through Maximus Federal Services/Aidvantage while those with Granite State will be using EdFinancial Services. Borrowers can also log onto StudentAid.gov to check to see if they have been assigned to a new loan servicing provider.

 

More Options for Loan Forgiveness

The administration of President Joe Biden has made loan forgiveness a priority during its time in the White House. For instance, the U.S. Education Department is currently working to ensure that the previous payments have been calculated properly so that they are aware of the debt forgiveness previously promised to them.

The Department of Education also said that they are committed to improving the Public Service Loan Forgiveness program by releasing a tool that streamlines the process of applying for a debt cancellation after the borrower has completed 10 years of payments along with working in a public service job. While the president's initial plan to implement more widespread student loan forgiveness was blocked by the U.S. Supreme Court, the White House maintains that it is exploring other alternative options.

 

Late Penalty Protections

The federal government is also taking steps to ensure that the restart of the program goes as smoothly as possible. One of these steps is to guard borrowers from being hit with financial consequences for late payments for the first year after the program restarts. Loans will not go into default if payments are not made on time. In addition, late fees will not be charged and delinquencies will not be put on your credit record.

However, it should be noted that interest will continue to accrue if you do not make payments. This makes it important to start to repay the loans as soon as you can.

 

Launch of SAVE Program

Lastly, it is a good idea to explore the options available to you as part of the new Saving on a Valuable Education (SAVE) plan. This recently launched plan is designed to significantly reduce the total amount of debts owed by borrowers. While some of these benefits will not be implemented until next summer, now is the time to familiarize yourself with the program.

The plan reduces the amount of discretionary income that borrowers need to put toward paying off these debts from 10% to 5%. The SAVE plan also boosts the amount of income exempted from the amount that you owe with each payment. You owe it to yourself to look into this plan to determine how you can take advantage of the new rules to lower your payments.



Understanding the ins and outs of these changes to the lending system will help you to be ready when that first bill hits your mailbox. You do not want to be caught off guard if these changes are going to impact you as a borrower.