Student loan payments have been paused for several years due to the COVID-19 pandemic, providing relief to millions of borrowers. However, this pause won’t last forever, and many are wondering, “When do student loans resume?”
Why Were Student Loans Paused?
The U.S. government implemented a pause on federal student loan payments starting in March 2020 as part of the CARES Act, in response to the economic hardships caused by the COVID-19 pandemic. This pause was extended several times as the pandemic continued to affect the economy. During this period, interest rates were set to 0%, and collections on defaulted loans were also suspended.
When Do Student Loans Resume?
Student loans are set to resume on October 1, 2023. The exact date your payment is due may vary depending on your loan servicer, but most borrowers should expect to start making payments again around this time.
What Should You Do to Prepare for Repayment?
As the resumption date approaches, it’s essential to prepare for repayment. Here are some steps to take:
- Review Your Loan Details: Check your loan balance, interest rates, and the terms of your repayment plan. This will help you understand what to expect when payments resume.
- Update Your Contact Information: Ensure your loan servicer has your current contact information so you receive important updates and notifications.
- Explore Repayment Options: If you’re worried about affording your payments, consider enrolling in an income-driven repayment plan, which adjusts your monthly payment based on your income.
- Set Up Auto-Pay: To avoid missing payments, consider setting up automatic payments with your loan servicer.
- Start Budgeting: Begin setting aside money now to ease the transition back into repayment.
FAQs
1. What Happens If I Miss a Payment?
If you miss a student loan payment, your loan could become delinquent. After 90 days of non-payment, it will be reported to the credit bureaus, which could negatively impact your credit score. If your loan remains unpaid for 270 days, it may go into default, leading to more severe consequences, such as wage garnishment and loss of eligibility for federal benefits.
2. Can I Extend the Payment Pause?
As of now, there are no plans to extend the payment pause beyond October 1, 2023. However, you can explore alternative repayment plans or request a deferment or forbearance if you’re experiencing financial hardship.
3. How Do I Enroll in an Income-Driven Repayment Plan?
To enroll in an income-driven repayment plan, contact your loan servicer or visit the Federal Student Aid website. You’ll need to provide information about your income and family size to determine your eligibility and monthly payment amount.
4. Will Interest Rates Change When Payments Resume?
When payments resume, interest rates will return to their original levels, as specified in your loan agreement. The 0% interest rate that was in place during the payment pause will no longer apply.
5. What If I’m Unable to Afford My Payments?
If you’re unable to afford your payments, you have several options, including income-driven repayment plans, deferment, and forbearance. It’s important to contact your loan servicer as soon as possible to discuss your options and avoid default.
6. Can I Make Payments Before the Official Resume Date?
Yes, you can make payments before the official resume date. Any payments made during the pause go directly toward your principal balance, reducing the amount you owe and potentially saving you money on interest in the long run.
Conclusion
The resumption of student loan payments is a significant event that requires careful preparation. By understanding when your loans resume and taking proactive steps now, you can make the transition smoother and avoid financial stress.