College | August 24, 2023 | Lisa Litant
What you'll learn
With the news that the federal loan forgiveness program will not go forward, borrowers are preparing to make payments while rethinking their financial situations. Here are frequently asked questions and tips for resuming payments on your outstanding federal loans.
NOTE: These rulings affect federal student loans only; private student loans did not stop payments during the pandemic.
Loan forgiveness program
A. No, following the Supreme Court ruling, the program will not go into effect. Payments will resume in October (the exact date has not been announced). Interest will resume on September 1, 2023.
A. No, but if you’re in a “public service” job, you may be eligible for Public Service Loan Forgiveness. You need to meet special criteria to apply for this program.
A. The Department of Education is looking into alternatives, but there’s no timeline. You should plan to start making payments in October.
A. Your previous payments will continue as they did before the pause; and interest will start accruing (growing) again as of September 1.
A. Private loans (offered by banks, credit unions, and other financial institutions) were never part of the federal plan. Interest has continued to accrue (grow) and payments never stopped.
A. Yes, if you’re a teacher, public servant, or are totally disabled, you may be eligible for one of several forgiveness programs. Again, these apply to federal student loans only, not private ones.
A. The Department of Education is instituting a 3-month grace period for missed payments. This plan, an “on-ramp to repayment,” is designed to keep borrowers who fall behind on payments from having their credit records affected negatively.footnote 1
If you’re worried about being able to make your repayments, see if you can qualify for an income-driven repayment plan for your federal loans. There are several different programs available including the SAVE Plan.
A. It’s a new income-driven repayment program from the Department of Education that stands for Saving on a Valuable Education (SAVE). This is a revision of the Revised Pay as You Earn (REPAYE) plan; if you’re currently enrolled in REPAYE, you’ll be automatically enrolled in SAVE, which is a more affordable plan.
SAVE considers your income and family size. It can decrease your monthly payment amount and expands the eligibility for saving money every year. Learn more about SAVE.
A. There are 4 IDR plans, not counting SAVE, that can potentially help lower your monthly payments:
You can learn more about which plan might be best for your situation with this federal loan simulator.
Tips for making student loan payments
It may feel scary to start making federal loan repayments again after all these months. But the important thing is to plan ahead—don’t wait until you get the bill. With some pre-work, you can put yourself in the best possible financial position possible.