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
Q. Is the debt forgiveness program still happening?
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.
Q. I submitted an application and was approved for loan forgiveness—am I still eligible?
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.
Q. Is there any chance of a new program in the future?
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.
Q. Are there any other loan forgiveness programs that I might be eligible for?
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.
Q. What if I can’t make payments for all of my loans?
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.
Q. What is 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.
Q. What are the other federal income-driven repayment (IDR) plans?
A. There are 4 IDR plans, not counting SAVE, that can potentially help lower your monthly payments:
- Revised Pay As You Earn Plan (REPAYE) Plan
- Pay As You Earn Plan (PAYE) Plan
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
You can learn more about which plan might be best for your situation with this federal loan simulator.
Tips for making student loan payments
- Find out from your servicer what your payment might be.
- Make a budget to get a sense of your finances.
- Consider an income-driven plan to make your payments more manageable. If you were in one before the pause, check to see if you have to recertify it.
- If there are any ways to lower your payments (like signing up for auto debit), make sure you’re using them.
- If you think you’ll still have trouble making your loan payments for a short time, talk to your servicer about temporarily putting your loans into deferment or forbearance.
Beginning repayment again
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.