What to know about the end of the federal student loan repayment pause
Federal student loan payments were paused for roughly the past three years, but that pause has ended. Federal student loan interest resumed on September 1, 2023, and student loan payments began to be due again starting in October.
If you're one of the millions of borrowers with federal student loans, there are some things to know about the end of the student loan repayment pause and how you may want to adjust financially to best deal with it.
What was the federal student loan repayment pause?
During the student loan payment pause — which began on March 13, 2020, and was also known as an administrative forbearance — if your federal student loans were eligible, your loan payments were paused, and interest rates were placed at zero percent. In practice, that meant that federal student loan borrowers weren't required to make any student loan payments during the student loan repayment pause, and their loans weren't accumulating interest during that time.
In addition, loans that were on autopay were stopped, and collection activities on defaulted loans were also paused.
When did the federal student loan repayment pause end?
Most federal student loan borrowers' first student loan payments following the pause were due in October 2023.
If you have federal student loans that were impacted, your monthly student loan payment amount and due date depend on your loan terms, which you'll find on your monthly bill from your loan servicer.
You can expect to receive your student loan bill at least 21 days before the bill's due date. If you have any questions, contact your loan servicer.
What happens to existing federal student loans now that loan repayments have resumed?
Now that federal student loan payments have resumed, your existing loan amount will be reflected on your monthly bill, reduced by any loan forgiveness or cancellation you may have been eligible for.
If you graduated college or left school before March 1, 2023, your monthly payments on federal student loans likely started in October 2023.
If you graduated college or left school after March 1, 2023, you'll normally receive your six-month grace period and be required to start paying your monthly student loan payments once your grace period ends. For the most part, students who graduated in May 2023 will be required to start making payments in December 2023.
Autopay was automatically suspended when the student loan repayment pause began. Therefore, if you want to pay your federal student loans with autopay now that the payment pause has ended, you might need to enroll (or re-enroll) on your loan servicer's website.
What are federal student loan interest rates now that payments have resumed?
Now that the student loan repayment pause has ended, most borrowers' interest rates will be the same as before the repayment pause. However, your interest rate may have changed if you consolidated your federal student loans during the repayment pause. You can view your loan interest rates by logging onto your loan servicer's website.
What happens to unpaid interest on federal student loans now that the payment pause has ended?
Now that the student loan repayment pause has ended, if you have outstanding federal student loans, you'll have to repay your loan principal and any unpaid interest on the loans. For the most part, interest didn't capitalize on your federal student loans during the payment pause and might not for another six months now that the payment pause has ended. When interest does capitalize, it gets added to your loan's principal balance.
If you consolidated your student loans during the repayment pause, any unpaid interest on the loans you consolidated will become part of the principal balance of your new consolidated loan.
What happens if you miss, make a partial, or make a late federal student loan payment going forward?
The Department of Education is allowing for a one-year "on-ramp" period in which missed, partial, or late payments won't be reported to credit agencies. The loans also won't go into default or be deferred to debt collection agencies during this period. This will be in effect from October 1, 2023, and will continue for up to 12 months, ending September 30, 2024.
Steps to consider taking now that the federal student loan repayment pause has ended
Now that federal student loan payments are due again, consider exploring some of these action items.
Update your contact information (if needed)
Make sure your contact information is updated on the Federal Student Aid website. Also, update your information on your loan servicer's website, so that you can receive all the information you need about your student loans in a timely manner.
Explore loan repayment options if your monthly payments feel unmanageable
If your monthly student loan payments feel unmanageable, you might want to consider applying for an income-driven repayment (IDR) plan. With an IDR plan, your monthly payment is adjusted based on your income and the size of your family.
One IDR plan to investigate is the newly launched Saving on a Valuable Education (SAVE) Plan, designed to reduce monthly payments for millions of borrowers. If you were enrolled in the Revised Pay As You Earn (REPAYE) Plan, you've been automatically enrolled in the SAVE Plan, so you won't need to reapply or request to change your plan. Borrowers of many types of federal student loans can also apply for this plan.
Other student loan repayment options include:
- Standard Repayment Plan
- Graduated Repayment Plan
- Extended Repayment Plan
- Pay As You Earn Repayment Plan (PAYE)
- Income-Based Repayment Plan (IBR)
- Income-Contingent Repayment Plan (ICR)
- Income-Sensitive Repayment Plan
If you submit an application and are approved for a repayment plan, you can view your new payment amount, which will also be displayed on your loan servicer's website when your first bill is issued that takes into account your repayment plan.
Consider enrolling in autopay
If you enroll in autopay for your federal student loans, your servicer will automatically deduct your monthly payment from your bank account.
Choosing to autopay is optional, but it provides a 0.25% discount on your loan's interest rate. You'll be alerted before every withdrawal when you use autopay.
Establish a new budget and determine if you need to reduce your spending
You may have removed student loan payments from your budget because of the student loan repayment pause. Now that it's ended, you may need to adjust your spending to account for this change.
It might be a worthwhile exercise to put together a new monthly budget so you can best set yourself up to meet your financial goals.
Final thoughts
For over three years, federal student loan borrowers have been excused from making student loan payments. While some borrowers will likely find the end of the pause challenging, there are steps to take to make the monthly payments more manageable.
