Preparing for Student Loan Payment Resumption

Barbara O’Neill, Ph.D., CFP®, AFC®
Martie Gillen, Ph.D., MBA, AFC®, CFLE

Payments on federal student loans are currently suspended, without interest, until sometime in 2023. In early January, the exact start-up date for payment resumption is unknown due to ongoing litigation regarding the proposed student loan debt forgiveness plan to cancel up to $20,000 of debt held by eligible borrowers. 

The current loan payment pause, the eighth since payments and interest were initially suspended in March 2020, will last 60 days after litigation is resolved by the U.S. Supreme Court, which has agreed to hear the case in February. If the issue is not resolved by June 30, 2023, payments will resume 60 days later. Effectively, this means that payments could resume in early to late spring 2023, but no later than the end of August. 

The U.S. Department of Education will notify borrowers when payments will restart.

Almost three years of suspended payments is a long time. A lot can happen in borrowers’ lives. Below are seven tips for Personal Financial Managers to help prepare military families for student loan payment resumption:

1. Rework Current Budget

   Borrowers who got used to a higher living standard will need to “find” money to resume loan payments. This may involve reduced spending, reduced savings, and/or a “side hustle” income.

2. Check the Loan Servicer

   During 2022, some loan servicers stopped administering student loans and their loan portfolios were transferred to new providers. Experts advise downloading and saving payment data from a previous loan servicer before its contract with the U.S. Department of Education ends.

3. Update Contact Information

   Borrowers who have moved should make sure that their current loan servicer and Federal Student Aid (FSA) have their current contact information (U.S. mail address, phone number, and e-mail address).

4. Anticipate Notifications

   Borrowers should carefully review both U.S. mail and e-mail from their loan servicer and check the servicer’s website for loan repayment updates.

5. Prepare Bank Account

   Auto-debit arrangements in place before March 2020 may need to be re-established. Loan servicers must be notified if a borrower’s financial institution has changed. 

6. Recertify Income

   Borrowers with 2023 income lower than it was in March 2020 may benefit by recertifying their income before payments resume to qualify for an income-driven loan repayment plan.

7. Organize Loan Records

   Borrowers should use the time before loan payments begin to organize paper and/or electronic student loan records (e.g., billing and payment history, loan details, applications, and important loan servicer notifications).

For additional information, review the FSA COVID-19 Loan Payment Pause and 0% Interest website.

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