How to Manage Student Loans Again

By Victoria Sado

It’s happening. After three whole years on pause for COVID-19 relief, federal student loan payments are back. And it’s for real this time: Congress recently passed a law preventing further extensions. (Not to mention, student loan forgiveness has been struck down). So, mark your cals:

  • Interest starts accruing on September 1, 2023

  • Student loan payments restart on October 1, 2023

If you’re thinking: “But, 😩, I’m not ready!” We get it. A three-year break from anything is a lot of time off — enough that you’ve probably gotten used to life without those minimum student loan payments weighing down your budget.

Now that payments are back, we’re here to help you manage. Here’s what you need to know about student loan payments, plus the money moves to make for the smoothest payback possible.

What to know about student loan payments

When am I required to start paying my student loans again?

Interest on federal (not private) student loan payments resumed on September 1, 2023, and payments are due starting in October. That’s when your loan servicer will start coming around again, probably in the form of a notice or billing statement, letting you know that your next payment is due. (Don’t worry, it should come at least three weeks before the due date.)

Has my final payoff date been pushed back? If so, by how long?

There’s no simple answer to this. No matter which student loan payment plan you’re on, you’ll need to log in to your provider’s website and check your account to confirm your new payoff date. 

So, will I just start paying the same amount again?

Maybe, but also maybe not. The government has said it’s possible that your minimums could change — and even finalized a new income-based repayment plan that provides the lowest monthly payments to nearly all borrowers. Here’s how that might affect you: 

  • If you made payments during the pause: Normally, monthly minimum payments get split between the “principal amount” (usually the amount you borrowed) and the interest that’s accrued on that balance. But the moratorium included a pause on any interest, which means that if you’ve made any payments since the forbearance period started, those payments will have gone toward the principal. That decreases the total amount you owe faster than if you’d also had to pay interest, so once the moratorium is over, your monthly minimum should be lower.

  • If you’re enrolled in REPAYE or apply for REPAYE now: Your income-based repayment plan is slated to get a big makeover this summer, before monthly payments are due. Meet the Saving on a Valuable Education (SAVE) plan, aka “the most affordable repayment plan ever created.” Why the hype? Because the Biden-Harris administration says the finalized income-based repayment plan provides the lowest monthly payments to nearly all borrowers. Here are the changes you can expect:

    • The income exemption will increase from 150% to 225% of the poverty line. That means you won't owe loan payments if you’re a single borrower earning $32,800 or less or a family of four earning $67,500 or less (amounts are higher in Alaska and Hawaii). Borrowers earning more than these amounts will save at least $1,000 per year, compared to the current income-driven repayment plans.

    • 100% of remaining interest will be cut for both subsidized and unsubsidized loans after a scheduled payment is made under the SAVE Plan. If you make your monthly payment, your loan balance won’t grow due to unpaid interest.

    • Spousal income will be excluded for borrowers who are married and file separately. This change removes the need for your spouse to cosign your IDR application.

  • If you’re on other income-based repayment plans: Your payments will start up again exactly where they left off, unless (a) you’ve made payments during the moratorium, and / or (b) your income has changed and you’ve “recertified” (aka officially notified your loan servicer of the change).

But anything is possible. In other words, we recommend double-checking what your monthly payment amount will be before student loan payments resume.

I’m enrolled in the Public Service Loan Forgiveness Program. Did the government still count the months of the moratorium as part of my service?

Good news for PSLF folks! Even though you weren’t required to make payments during the moratorium, all those months still counted toward your 120 qualifying monthly payments, as though you had been. (Although note: You have to have been working for a qualified employer when you applied and for the entire moratorium period — any months when you weren’t didn’t count.)

If you started working for a qualified employer during the moratorium, you can still apply for the program. 

OK well, I can just let the auto-payments withdraw whatever I’ll owe, right?

Don’t sit back and do nothing. For most borrowers, auto-debt payments won’t restart just like that. You’ll likely need to opt back in to your servicer’s auto-debit program, but there are exceptions, depending on your status. Once again, it’s a good idea to ask your servicer for the deets unique to your debts.

What if I still can’t afford my student loan payments?

While some people’s bank accounts may have benefited from a period of limited social engagement, many others are in a worse place than they were at the beginning of it. If that’s you, the return of your pre-pandemic expenses might be really disruptive. But you have some options.

  • Let’s talk about the “on-ramp.” While the Department of Education legally can’t extend the pause on student loan debt again, it's set up a “12-month ‘on-ramp’ to repayment,” running from October 1, 2023, to September 30, 2024. No action is needed to qualify for the “on-ramp.” During this grace period, payments will still be due and interest will still accrue. But borrowers who miss payments wouldn’t be subjected to the worst consequences of missing their billing due dates: No delinquency or default status. No referrals to collection agencies. No hits on their credit scores. Borrowers who can pay should pay to avoid the interest creep, but this option gives ‌people who need more adjustment time exactly that.

  • If your income has been reduced (or eliminated), you can request to switch to an Income Driven Repayment (IDR) plan that’s best for your situation. That decreases your monthly minimum payments based on how much you make now. 

  • If you have private student loans — which weren’t covered by the federal moratorium — you might consider refinancing and / or consolidating those, depending on your credit. (We don’t typically recommend refinancing federal loans.)

Whatever you do, the goal here is to avoid defaulting on your loans. If even an IDR plan will be too much of a burden, you can try applying for an additional deferment or forbearance. But even then, keep in mind that a deferment isn’t completely payment free: Normally (aka not in pandemic-relief times), interest will continue to accrue on your outstanding balance, so it can help to at least keep paying that interest as it builds up, if possible. Otherwise, the interest will be rolled into your principal balance (meaning you’ll pay interest on that interest when the deferment is over).

We know adding student loan payments back into the mix after such a rough couple of years is going to be a pain, at the very least. One silver(ish) lining: Because federal student loans are relatively low-interest, they’re often considered a “good” form of debt, which means they’re less likely to hurt your credit than, say, a high-interest credit card balance. (They can even help your credit score to an extent, since making regular payments establishes a history of being able to pay off debt.) 

You can also think of this return as an opportunity to start flexing that money-goals muscle again, to get yourself back on the road to fully paying off student loans and becoming debt-free.

Need more advice navigating your student loans? If you’re still nervous about building your student loan payments back into your budget, or you need some help making a debt plan or a budget (or both), our financial planners can help. Become an Ellevest client today to unlock up to 50% off all sessions and free workshops.


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Victoria Sado

Victoria Sado is a CFP® Professional at Ellevest. She works with Ellevest clients to help them take financial control and make a plan to hit their money goals.