When Do Student Loan Payments Restart? Jan. 1, 2023

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Interest, payments, and collections on most federal student loans will restart after the forbearance ends on Dec. 31, 2022.

The Education Department announced today that President Joe Biden was extending the pandemic-era pause on student loan repayment, first implemented under the Trump administration, through Dec. 31, 2022.

The president is also bringing student loan relief to millions of Americans by knocking off at least $10 thousand from their balances in the next few months. Pell Grant recipients — a federal grant to pay for higher education — can get double that amount. The Biden administration anticipates that the mass debt cancellation will provide relief to 43 million borrowers — if everyone claims the relief they’re entitled to receive.

The announcement arrives ahead of the midterm elections and could give the Democrats a boost with some voters. But it could also threaten their standing with Republicans and those who say the amount being forgiven isn’t enough — or too much.

Ahead, learn more about when federal student loan payments resume.

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When does student loan interest start again?

Student loan interest is on hold until the forbearance ends on Dec. 31, 2022. Interest will begin to accrue the next day. You can find your interest rate by contacting the student loan servicer — the company that handles your account.

The White House has said this latest extension will be the last for federal student loan debt.

Here’s a list of federal student loan servicer companies:

Not sure who your servicer is? Visit studentaid.gov, go to your account dashboard, and scroll down to the “My Loan Servicers” section. Keep in mind that more than one company may have your loans. Be sure to locate all of your loans before the resumption of payments so you don’t risk delinquency and harming your credit score. You can also call the Federal Student Aid Information Center at 1-800-433-3243.

"Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic,” said U.S. Secretary of Education Miguel Cardona., “and restore trust in a system that should be creating opportunity, not a debt trap.”

How can I find out my payment amount and due date?

You can find the due date for your first student loan payment by contacting your student loan servicer. Ask the representative the following questions:

  • When will my first payment be due?
  • What repayment plan am I in?
  • What will my payment amount be?
  • When can I sign up for autopay?
  • What is my student loan account number?*

Learn More: Who Do You Contact If You Have Questions About Repayment Plans?

* You’ll need this information to claim the interest deduction on your tax return.

How to lower student loan payments when they resume

Some borrowers won’t have trouble making payments when student loan bills start arriving this winter. But for others — recent graduates, parents, borrowers in student loan default, and so on — the payment amount won’t fit their budget, which could force them to make tough choices. Thankfully, the federal government — unlike private lenders — offers its borrowers flexible repayment options to accommodate most situations.

Here’s how to lower student loan payments, depending on your situation.

If you have a financial hardship or recently graduated from college

You can request an affordable payment that’s tied to your income and family size. If you don’t have income or are drawing Social Security benefits, your monthly payment could be zero.

Ask your servicer about enrolling in one of the income-driven repayment plans: IBR, ICR, PAYE, or REPAYE. You can use the Loan Simulator on the Federal Student Aid website, studentaid.gov, to estimate your payment amount based on your current pay or your adjusted gross income from your most recent tax return.

Learn More: How to Pay off Student Loans

If you’re pursuing Public Service Loan Forgiveness

Make sure you submit a new PSLF Employment Certification form and update your income and family size before the student loan recertification deadline, March 2023. The Education Department is allowing borrowers to self-report their income through July 31, 2022. That means you don’t have to submit a tax return or pay stub when you report your income. If you submit the IDR application online, select “I’ll report my own income” when you get to Step 2.

Note: Last October, the Education Department announced it would give retroactive credit toward public service forgiveness to borrowers working full-time for the government or an eligible nonprofit who hadn’t yet had their loans forgiven. To receive credit, you must apply before the PSLF Waiver ends this year on October 31, 2022.

As of August, over 175 thousand borrowers have received over $10 billion in loan cancellation through the Public Service Loan Forgiveness Program and its waiver. Read more about the student loan waivers.

The U.S. Department of Education is continuing its work to improve PSLF. Last week, it announced proposed changes to the regulations that would allow more payments to qualify for PSLF and allow some deferments and forbearances to count toward PSLF.

Learn More: PSLF Reddit — What Works and Doesn’t Work

If you have Parent PLUS Loans

Look into changing repayment plans. The Extended or Graduated plans stretch your repayment term over 25 or more years and give you a payment amount that either stays the same or goes up every few years. Those plans are good options if you’re still working and have a high income.

But if you need a lower payment because you’re about to retire or are already drawing Social Security benefits, look into the income-contingent repayment plan. The ICR plan caps your monthly payment at 20% of your income. You could have a zero-dollar bill if Social Security benefits are your only source of income when the moratorium ends.

Learn More: How to Pay Off Parent Plus Loans

If you have FFEL or Perkins Loans

You can get the benefits other federal student loan borrowers have received throughout the coronavirus pandemic by consolidating your loans into a Direct Consolidation Loan. Consolidation has two main advantages:

  • It can give you a lower monthly payment for all your federal student loans.
  • It can give you credit towards forgiveness with the PSLF Waiver for a limited time.
  • You can also apply payments and past forbearances from consolidated loans towards loan forgiveness through income-driven repayment by taking advantage of the IDR Waiver.

You can consolidate for free at studentaid.gov.

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If you’re in default

When President Biden extended the pause in April, he also teased an announcement that all federal student loan borrowers in default would be returned to good standing before payments resume under Operation Fresh Start. Read more about the student loan fresh start program.

“During the pause, we will continue our preparations to give borrowers a fresh start,” Education Secretary Miguel Cardona said, “and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs.”

The Education Department hasn’t yet shared details on the steps it plans to take to make the operation successful, despite a request from members of Congress that it share those plans.

If you need to get out of student loan default before the freeze ends – maybe to buy a home or return to school – consolidating your defaulted loans can put you back in good standing in five to six weeks.

Learn More: How to Consolidate Student Loans in Default

Need help with your loans before the freeze ends? Let’s talk.

If you want to go over options for your options before the student loan payment pause ends, schedule a 10-minute phone call with me. I am a student loan lawyer with years of experience helping people find ways to deal with their loans so they can achieve their personal goals: start a family, buy a house, retire, etc.

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