Student Loan Repayments 2.0: Your Top 9 Questions Answered

Tens of millions of Americans are just getting their first federal student loan bills in more than three years as the last major pandemic relief program comes to an end. Others who graduated since the onset of COVID-19 will be making their first-ever payments. 

Between the logistics, the program rules, and maybe your own financial situation, a lot may have changed since the last time bills were due on student debt. So The Messenger used Google Trends to understand what borrowers are asking as they search the internet for information. 

Here are the answers to your top questions, plus some other basics you should know.

When Do Student Loan Payments Start?

The first student debt payments are due to resume sometime this month, though interest began accruing on outstanding balances on Sept. 1. You’ll get your billing statement or other notice at least 21 days before your payment is due, according to the Department of Education.

The one exception is if you finished school within the last six to nine months. Then you are still in the automatic grace period.

What Should You Do First?

The first place to go is the website for the Department of Education’s Federal Student Aid office, studentaid.gov. This will give you access to your account dashboard, which lists a bunch of information, including the name of your loan servicer — the company that handles your billing. If your servicer has changed, the dashboard will tell you.

If you don’t have an FSA ID (what the site calls a username) yet, click “Create an Account,” and provide your name, date of birth and Social Security number to register. It’s good to verify your phone number and email right away in case you need to reset your username or password in the future.

If you already have an FSA ID and password, dig those out from your pre-pandemic days or use the prompts for those who have forgotten. Note: You can only have one FSA ID linked to your Social Security number.

Once you’ve entered your FSA ID and password, you’ll see a somewhat intimidating message that starts by saying: “You are accessing a U.S. Federal Government computer system intended to be solely accessed by individual users expressly authorized to access the system by the U.S. Department of Education.” Hit “Accept,” and you’re in.

If for some reason you can’t log in, call 1-800-4-FED-AID for loan servicer information.

What If You Can’t Make Your Student Loan Payments Right Now?

Everybody gets a 12-month transition period that helps protect your credit score if you’re late with payments or miss them altogether. You should still pay if you can, but if you don’t, the Department of Education will not report you as delinquent to the credit bureaus. It will consider you in forbearance through Sept. 30, 2024.

During the transition period, payments are due and interest will still accrue, but the interest will not be capitalized at the end of the 12 months, meaning it won’t be added to the balance of your loan and you won’t have to pay interest on your interest. Instead, borrowers may see their monthly payments adjusted at the end of the period to reflect the additional amount due.

You don’t need to apply for this grace period — it’s automatic.

If You Use the 12-Month Grace Period, Will All 12 Months Worth Be Due at the End?

No. Again, the company that handles your bills will adjust your monthly payment amount so that you still pay off your loan in the time specified when you took it out. If you are on what’s known as an income-driven repayment, or IDR, plan (see the SAVE Plan question below), any additional interest will not increase your payment amount, however.

Don’t be alarmed if your loan servicer sends you bills that show you are behind on your payments. That’s to be expected.

Can You Change Your Student Loan Repayment Plan at Any Time?

Yes, you can change repayment plans at any time and at no cost. The Department of Education suggests that you contact your loan servicer (see above) to discuss repayment plan options and/or switch your repayment plan.

If you don’t know who your loan servicer is, or if you need the telephone number, you can find it on your dashboard at the studentaid.gov website or you can call 1-800-4-FED-AID.

Who Should You Contact If You Have Questions About Repayment Plans?

You should contact your loan servicer with questions about repayment plans. You can also go to studentaid.gov to do your own research about repayment plans and how to apply for them.

What Is the SAVE Plan?

Under a standard repayment plan, your monthly federal student loan payment is based on your balance, interest rate and the standard repayment term of up to 10 years.

But you can also get a plan where your payment amount is based on your income. The SAVE Plan, which stands for Saving on a Valuable Education, is the latest — and most generous — of those so-called “income-driven repayment” plans, or IDR plans.

Payment amounts on undergraduate loans are cut to 5% of discretionary income from 10%, the threshold for what qualifies at discretionary income is higher, any interest that monthly payments don’t cover is waived, and depending on the loan amount, remaining balances can be canceled in as soon as 10 years rather than 20.

The Education Department unveiled the SAVE Plan during the payment pause, and you can apply for it now. While some of the provisions don’t take effect until next summer, the threshold for discretionary income has already been raised to 225% of the poverty level from 150%. That means a typical borrower will save more than $1,000 a year on payments and anyone making under $32,805 a year can skip payments altogether, according to the department.

To apply, go to studentaid.gov/idr, log into your Federal Student Aid account (see above), and choose from “New IDR Applicants” or if you’re already in an IDR,  “Returning IDR Borrowers.” The SAVE Plan replaces the REPAYE Plan, so you don’t need to do anything if you already had REPAYE.

What Is the Student Loans Calculator?

Anyone can apply for a SAVE Plan, but it’s geared toward lower-income borrowers who want to lower their payments. If you earn more money (congratulations!) your payment amount would actually increase with an IDR like the SAVE Plan, which you may or may not want. Yes, you would save on interest if you pay your loan off more quickly, but you can do that with any repayment plan.

The Student Loans Calculator is an online simulator that will help you determine which option is best for you. Log into your Federal Student Aid account, go to your dashboard, and click on “Loan Simulator” on the right hand side.

Will There Be Any Student Loan Forgiveness?

In June the Supreme Court struck down the broad-based forgiveness plan proposed by President Joe Biden, so borrowers won’t have up to $20,000 erased from their balances.

However, the Biden administration is still trying to get some kind of forgiveness authorized, and has started what’s known as a negotiated rulemaking process.

A rulemaking committee will focus on five key borrower groups, including those who now owe more interest than the amount of their original loans, those who have owed money for decades, those who qualify for an IDR (see above) but haven’t applied, and those who have had financial hardship.

Keep in mind that forgiveness has always been an option for many teachers, doctors and government workers (they can have their loans forgiven after 10 years of public service) and for borrowers whose college took advantage of them or closed before they could complete their education.

Plus, IDR plans offer forgiveness on any outstanding balances after 20-25 years, and in the case of the SAVE Plan, after as little as 10 years, if the original loan balance is $12,000 or less. That time period increases by one year for every $1,000 borrowed over $12,000. For example, if your original balance is $16,000, any remaining balance will be forgiven after 14 years.