As part of the debt ceiling bill signed by President Biden on June 3, 2023, Congress ordered the end of the payment pause that began with the CARES Act in March 2020. Accordingly, payments, interest accrual, and collections must resume after August 30, 2023.
The Biden Administration has announced that interest accrual will begin September 1, 2023, and payments will start in October 2023. Use the information below to prepare for the resumption of payments.
The Biden Administration’s newest and best income-driven repayment plan, SAVE, will be available this summer and could offer you substantial savings. If you enroll in the REPAYE plan now, by simply contacting your loan servicer, you will automatically be transitioned to the SAVE plan, which will result in a lower monthly payment than any other income-driven plan currently available and any unpaid interest will be erased monthly.
All SAVE plan payments made on Direct loans will count toward public service loan forgiveness, with one exception. Unfortunately, Parent PLUS loans generally must be consolidated, then paid through the income driven repayment plan, but there may still be a way to enroll those loans in the SAVE program—counselors from CEA Member Benefits partner Cambridge Credit Counseling can review that process with you.
What to Expect When Payments Resume
- Your servicer will contact you about payments resuming.
- You will receive an invoice at least 21 days before your first payment is due.
- Your loans will start accumulating interest September 1.
How to Prepare for Payment Resumption
Identify your servicer – Many borrowers were transferred to a new loan servicer during the payment pause. For example, if you applied for Public Service Loan Forgiveness, your loans have been or will be transferred to MOHELA. Make sure you’ve set up your online account with your new servicer.
If you are not sure which servicer your loans were transferred to, log into your Federal Student Aid dashboard. If you can’t log in, call 1-800-4-FED-AID (1-800-433-3243) for loan servicer information.
Update your contact information – Your servicer will need current contact information to notify you about upcoming payments. Make sure your servicer has the correct email address, telephone number, and mailing address. If you do not know who your servicer is, log into your studentaid.gov account with your FSA ID.
The Department of Education will need current contact information to notify you about the resumption of payment. Update your contact information on your studentaid.gov account today!
Enroll in or Recertify Your Income Driven Repayment (IDR) Plan
- If you are already enrolled in an IDR plan, your servicer will let you know if it is time for your annual recertification. If your income and/or family size has changed, your required monthly payment amount may increase or decrease.
- If you cannot afford your payment amount under your current IDR plan, explore other IDR plans here and submit an application for the one that best fits your needs.
- CEA has partnered with Cambridge Credit Counseling to help members reduce or eliminate their student loan payments. There are many student loan plans available that most borrowers either aren’t aware of, or are too complex to initiate. Cambridge Credit’s Student Loan Solutions Center can identify all of the repayment programs available to you, based on your unique situation. As a CEA member, you’ll have exclusive access to this portal for only $24.95!
- The Biden Administration has announced that the newest and best income-driven repayment plan—SAVE—will be available this summer. If you are already enrolled in the REPAYE Plan or sign up for the REPAYE plan now, you will automatically be transferred to the SAVE plan. Under SAVE, your monthly payments will drop by at least $1,000 annually and any unpaid interest will be erased monthly!
Enroll in Autopay
Don’t miss a single payment—enroll in autopay with your servicer. If you enroll in autopay, you will save 0.25% on your interest rate. You will receive a reminder before every payment is made.
If you were enrolled in autopay before the payment pause, you may need to reenroll.
Get Help if Your Loans Are in Default
Getting your loans in good standing and making payments now can get you on the path towards Public Service Loan Forgiveness (PSLF) and other forgiveness programs. The Biden Administration has developed a life-changing program that will bring borrowers out of default and give them access to PSLF, called Fresh Start.
Do Not Ignore Messages from Your Servicer
Payment will be due soon after you receive an invoice. To ensure you make your payments on time, open and read every message you receive from your servicer.
Missed payments can quickly become a problem. Missed payments do not count towards PSLF, unless you repay the amount due within 15 days of the due date. If you miss your payment due date, your loan will become delinquent until you repay the amount due. Your servicer is likely to report delinquency to the credit bureaus after 90 days, and your loan can risk going into default if it remains delinquent.
However, if you miss a payment or cannot make a payment—not to worry, the Department of Education has promised that for the next year any missed, partial, or late payments will not result in default or loans being sent to collection agencies. In addition, missed payments will not be reported to credit reporting agencies.
