Navigating the End of the Student Loan Payment Pause: What Borrowers Need to Know

After an unprecedented three and a half year pause on federal student loan payments and interest, borrowers will have to resume making payments beginning in October 2023 (interest accrual resumed on September 1, 2023). The pause, which was first implemented in March 2020, was an effort by the Trump Administration to mitigate the economic fallout of the COVID-19 pandemic. Over time, it was extended nine times, leading to contentious debates that cut across political lines about the need and cost of the measure. Ultimately, after reaching a deal with House Speaker Kevin McCarthy, President Biden signed the Fiscal Responsibility Act into law ending the pause on student loan payments and barring his Administration from providing any additional extensions.

Despite the end of the pause, the Biden-Harris Administration has gone to great lengths to ensure that borrowers transition back into repayment with as little disruption as possible.  

• First, for borrowers who cannot afford payments when they resume, a temporary “on-ramp” period of 12 months will be provided that will allow them to avoid the consequences of missed payments.  

• Second, to account for previous income-driven repayment (IDR) payment counting errors, the Education Department forgave the student debt of more than 804,000 borrowers using a one-time account adjustment that counted months in repayment status and certain deferments and forbearances toward IDR forgiveness.  

• Lastly, to make repayment more affordable, the Administration created the Saving on a Valuable Education (SAVE) IDR plan which will reduce monthly payments by adjusting the discretionary income threshold, eliminating the accumulation of unpaid interest, and lowering the monthly discretionary income percentage for some borrowers. You can read more about the SAVE plan and how it compares to other IDR plans by checking out AccessLex Institute’s blog post and accompanying infographic.  

Although the Administration has taken steps to prepare for payment resumption, it's important for borrowers to be aware of the impending changes and to plan accordingly. A checklist of actions and key considerations as the repayment hiatus comes to an end include: 

• Loan Servicer Communication: Keep an eye on communications from your loan servicer. They will provide information on the specific repayment terms, including the amount due, due dates, and payment methods. It's crucial to stay informed about any changes or updates related to your loans. 

• Income-Driven Repayment Plans: Federal student loan borrowers who experience financial hardship can explore IDR plans. These plans base monthly payments on your income and family size, making them more manageable. If eligible, consider renewing or applying for an IDR plan, including the new SAVE plan.  

• Loan Forgiveness Programs: If you are pursuing loan forgiveness through programs like Public Service Loan Forgiveness or IDR forgiveness, make sure you understand the requirements and continue to meet them. Missing payments or not meeting eligibility criteria could impact your forgiveness prospects. 

• Financial Counseling: If you have concerns or questions about your student loans, consider seeking financial counseling or guidance. AccessLex has resources, like our guide of what you need to know and how you can prepare, our repayment resources page and webinar series walking borrowers through payment resumption, and AccessConnex by AccessLex^SM, which provides free financial counseling, available to help borrowers navigate the repayment process and explore options for managing their debt. 

• Legislative Changes: Stay informed about any potential legislative changes related to student loans. The political landscape can impact repayment options and forgiveness programs, so it's essential to keep abreast of developments. You can do so by following us on social media where we regularly provide student loan legislative updates.  
        

The end of the federal student loan payment pause indicates a significant financial shift for borrowers. By planning ahead, staying informed, and exploring available repayment options, borrowers can navigate this transition more effectively and make progress toward repaying their student loans.

Check out some of AccessLex Institute’s relevant advocacy resources: 

• Read our full set of Higher Education Act policy recommendations. 
• Visit our #MakeTheCase microsite to get involved in advocating to protect graduate lending.