10 Weeks Until Student Loan Payments Resume: Here’s What To Do

Payments and interest accrual on government-held federal student loans have been paused for nearly two years. Millions of borrowers have been able to focus their time, energy and resources on other financial needs during that time. This is particularly true for borrowers whose suspended payments count toward key loan forgiveness programs, like Public Service Loan Forgiveness (PSLF) and income-driven repayment terms.

But that relief might soon come to an end. President Biden’s most recent extension of the student loan pause is scheduled to expire around August 30, 2023, unless the courts rule on lawsuits sooner than that.

Here’s what you need to do.

Understand when payments restart

There are some signs that the relief could be further extended. For example, the Department announced that it would extend the suspension of certain collections activities against defaulted federal student loan borrowers for an additional six months.

And White House Press Secretary Jen Psaki suggested earlier in February that a return to repayment after May 1 was not set in stone when she used the word “if” in describing whether student loan repayment would resume. Of course, then the pause got extended until August 31.

But for now, most signs point to student loan payments and interest turning back on again this May. Tens of millions of borrowers resuming repayment all at the same time has never before occurred in the history of the federal student loan system, so there's no precedent and no playbook for this event.

A recent Government Accountability Office (GAO) report warned that borrowers might encounter problems, given potential communications gaps by the Department of Education and ongoing loan servicer changes rippling through the federal student loan system. Some borrowers are already reporting long hold times when trying to reach customer service agents with their loan servicer.

Absent any new, solid information from the Biden administration about what, if any, additional relief is under consideration, borrowers must assume that they'll need to start paying their loans again starting in May.

Update your contact information

It's critical that the Department of Education and your loan servicer have current, up-to-date information to reach you. This includes your email address, mailing address and phone number.

Borrowers have a legal responsibility under the terms of federal student loan promissory notes to keep their contact information current. This information is how loan holders and servicers send bills, statements, and important correspondence.

Given that many student loan borrowers are also experiencing loan servicing transfers, keeping your contact information updated is critical to know who is currently handling your loan.

Borrowers can start by reviewing and updating the contact information through the Department of Education’s web portal at StudentAid.gov.

Check your current loan servicer

The student loan servicing system is currently going through a major upheaval. Borrowers with government-held federal student loans that Navient serviced have now been transferred to a new loan servicer called AidVantage.

And borrowers with FedLoan Servicing are currently in the midst of ongoing transfers to several of the Department’s other contracted loan servicers such as MOHELA, EdFinancial and Nelnet. These transfers will continue through this summer.

The StudentAid.gov website provides information on a borrower’s current servicer. So if you are unsure who is currently servicing your loan, start there.

Review auto debit arrangements

Before the pandemic, many borrowers were repaying their student loans by having their monthly payments automatically deducted from their bank accounts. These auto-debit programs were useful in avoiding missed payments and usually came with a modest interest-reduction incentive. But auto-debit programs will not automatically go back into effect.

According to the GAO, student loan borrowers who were previously in auto-debit programs need to opt back in and confirm with their auto-debit election with their servicer. This is usually done by completing and submitting some sort of reaffirmation form stating that they want to continue with auto-debit. Borrowers whose loan servicer has changed may need to re-establish a new auto-debit arrangement from scratch.

Given some potential confusion surrounding auto-debit arrangements, borrowers should reach out to their servicer for any questions. Also, borrowers should monitor their online student loan accounts when billing resumes so that if they need to make a manual payment (if auto-debit doesn't turn back on) they can do so and avoid delinquency.

Temporarily relaxed rules for borrowers in income-driven repayment

The GAO recently confirmed prior reports that the Education Department will temporarily relax several procedures related to income-driven repayment plans to allow for a smoother transition to repayment. These flexibilities will include the following:

• Predictable payments. Borrowers who were on an income-driven repayment plan before the pause went into effect should have the same monthly payment that they had before, assuming they didn't recertify their income or request a recalculation during the payment pause.
• Delayed recertification. Regardless of when a borrower's regular annual recertification date is for their income-driven plan, borrowers aren't required to recertify their income for six months after the payment pause ends.
• Self-reporting income. Borrowers will still have the option of requesting a recalculation of their income-driven payment if desired. And those who request a recalculation can self-certify their income without necessarily supplying supporting documentation, such as a pay stub or their most recently-filed federal tax return. Borrowers might also be able to self-certify over the phone by calling their loan servicer rather than by submitting a formal application online or on paper.

Review changes to Public Service Loan Forgiveness (PSLF)

Borrowers who have been working for nonprofit or public organizations, or did so in the past, may want to take a fresh look at the Public Service Loan Forgiveness (PSLF) program. While PSLF historically has had restrictive rules that limited eligibility to only certain kinds of federal student loans that were repaid under specific kinds of repayment plans, the Biden administration enacted the Limited PSLF Waiver program, which dramatically expanded the eligibility pool for borrowers interested in the program. But the relief was temporary and expired October 2022.

However, borrowers who think they could benefit from PSLF should take the time to review the IDR Waiver. It has many of the same benefits as the now-expired PSLF Waiver. The Department has set up a dedicated website for the IDR Waiver, which borrowers should review thoroughly.