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Student loan payments restart this fall — here’s what to know, paths to loan forgiveness

People demonstrate in Lafayette Park across from the White House in Washington, Friday, June 30, 2023.
Andrew Harnik
/
AP Photo
People demonstrate in Lafayette Park across from the White House in Washington, Friday, June 30, 2023.

The student loan payment pause ends this fall, and close to 4 million Californians with student loan debt are set to resume payments starting Oct. 1. Loans will begin accruing interest a month before, on Sept. 1.

That comes after the Supreme Court struck down President Joe Biden’s plan to forgive up to $20,000 of federal student loans for eligible borrowers last month.

“I believe that the Court’s decision to strike down our student debt relief plan is wrong,” the president said in a written statement after the June 30 decision. “But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families.”

If you’re expecting to resume loan payments this fall, here’s what you need to know about repayment options and what’s ahead.

How can I check my student loan balance, interest rate and servicer?

You can check all three through logging into StudentAid.gov and checking your dashboard. If you’re having trouble logging in, you can also call the Federal Student Aid Information Center at 1-800-433-3243.

A full list of student loan servicer contact information is also available at the Federal Student Aid website.

If you’re having issues with your account history or having trouble getting in touch, you can also file a complaint to the Department of Financial Protection and Innovation, according to Celina Damian. She’s the student loan servicing ombudsperson for California, and says she’s the “advocate for borrowers” if they have questions or issues.

“It’s really important for them to right now know their loan, their options and then their rights — there is a California borrower Bill of Rights for California borrowers when they’re dealing with their [loan] servicers,” she said.

What if I’ve never paid any of my loan balance?

You’re not alone — per federal data, over 63,000 Californians with student loan debt are 24 and younger, meaning you were probably in college or newly graduated when the student loan payment pause began in March 2020.

“There were a lot of changes during the last three years of the pandemic, so we really want borrowers to start preparing now by calling their servicers, by finding out their loan balances,” Damian said.

First, you’ll want to make sure your contact info on StudentAid.gov and loan servicer’s website is updated.

Your first payment will be due Oct. 1 unless you’ve graduated, gone below part-time status or left school within the last six to nine months.

That repayment grace period depends on what federal loan you have. If it’s a Direct Subsidized, Unsubsidized or Federal Family Education Loan, your grace period is six months. If it’s a Perkins Loan, your grace period is nine months. (For more on grace periods, the Federal Student Aid Office has additional information here.)

You’ll learn the amount you need to pay at least 30 days before the payment’s due date, and receive a bill electronically and in your mailbox at least 21 days before then.

When you get your basic loan information — namely, your current balance — Damian says you’ll be able to “find out what repayment plan is best.”

A repayment plan can change the amount of your monthly payments. By default, everyone is signed up for the Standard Plan. But you can also switch to an income-driven repayment plan, which adjusts payments based on your income and household size.

If you sign up to autopay your student loan payment balance each month, you’ll also knock 0.25% off interest.

What should student borrowers in general know before payment restarts?

The Department of Education instituted a 12-month “on-ramp” to repayment from Oct. 1, 2023 to Sept. 30, 2024 for borrowers.

Any late, missed or partial payments won’t count against borrowers’ credit, cause their loans to default or refer them to collection agencies during this period, though loans will continue to accrue interest. After the on-ramp ends, future monthly bills will be adjusted to reflect the impact of the additional loan interest.

And last year, the federal government cleared all past due balances for student borrowers who defaulted or were delinquent on three types of loans:

  • William D. Ford Federal Direct Loan (Direct Loan) Program loans
  • Federal Family Education Loan (FFEL) Program loans (both Department of Education-held and commercially-held) 
  • Department of Education-held Perkins Loans

That means if you weren’t eligible to sign up for an income-driven repayment plan due to defaulted or delinquent loans, you can now do so.

Damian with the California Department of Financial Protection and Innovation stressed that everyone — not just new borrowers — call their loan servicer, check their loan balances and interest and make sure all their contact information is updated before the payment pause ends.

She recommends that borrowers use the StudentAid.gov Loan Simulator, where they “can actually enter their information and income.”

“It’ll give them an estimate of their payment on each of the different [loan repayment plans],” she said.

If you were already on an income-driven repayment plan before the student loan payment pause, the best time to recertify your income is now.

While you have at least six months to do so after the payment pause ends, if your household size and income have changed since March 2020, recertifying as soon as possible ensures that the payment you’re making in October is the lowest possible amount.

If you were already enrolled in autopay — which, again, knocks off 0.25% off your student loan interest rate — you’ll likely need to re-enroll, which you can do on your student loan servicer’s website.

Damian also cautioned borrowers to look out for scams, and to double-check with the Federal Student Aid Office if they receive mail addressed “urgent” or get a phone call about their student loans.

“Make sure that they are talking to reliable sources, any government ones like the DFPI, StudentAid.gov, the California Student Aid Commission, to get that information that they need,” she said. “We're not going to call borrowers.”

Loan services, like applying for an income-driven repayment plan or consolidating loans, are free through loan servicers.

What other paths are there to student loan forgiveness?

Over 800,000 borrowers across the country who have been paying off their loans for 20 years or more had their balances forgiven earlier this month. You can check your balance through your loan servicer to find out if you’re one of them.

If your school lied or misled you about the amount of debt you’d be taking on, you may qualify for a borrower defense discharge; you might qualify for a false certification discharge if your school falsely certified you to receive a loan; or you might be eligible for an unpaid refund discharge if you withdrew from school and the school never returned the funds to the loan servicer.

And if your school closed while you were enrolled or shortly after you withdrew, you could be eligible for a closed school discharge.

If you’re a teacher, government employee, public service worker, nonprofit worker or healthcare worker, you may qualify for Public Service Loan Forgiveness. Under PSLF, your remaining balance will be eliminated after you’ve made the equivalent of 120 qualifying monthly payments while working full-time for a qualifying employer.

The Student Borrower Protection Center website has more information about navigating the Public Service Loan Forgiveness application.

Some teachers can also apply for Teacher Loan Forgiveness, but you can’t receive credit to PSLF and TLF for the same period of teaching.

If you’re “totally and permanently disabled,” you may qualify for a total and permanent disability discharge to forgive the entire amount of your student loans.

Income-driven repayment plans also lead to student loan forgiveness — after payments are made over 20 or 25 years. That includes Biden’s new Saving on a Valuable Education Plan, or SAVE Plan, which the administration announced after the June 30 Supreme Court decision and called “the most affordable repayment plan ever created.”

Is the SAVE Plan available now?

No, but if you enroll or are enrolled on the Revised Pay as you Earn Plan for student loan repayment, you’ll automatically be enrolled in the SAVE Plan once it’s implemented in July 2024.

Three parts of the SAVE Plan are already in effect:

  • The income floor, at which a borrower will have a $0 monthly payment, is higher. It used to be the difference between your adjusted gross income and 150% of the poverty guideline amount for your family size; now, it’s the difference between your AGI and 225% of the poverty guideline amount. That means, for example, if you’re a single person in California making $32,805 or less, you won’t have to make a payment. 
  • If you make your monthly payment, all unpaid interest is eliminated. For example, if your loan gains $120 in interest a month and your monthly payment is $100, you won’t have to pay the additional $20.
  • Your spouse no longer has to cosign your application for an income-driven repayment plan.

The Department of Education will notify student borrowers when the SAVE Plan application is available. And Californians can also sign up for the Department of Financial Protection and Innovation newsletter to get information about repayment plans, potential forgiveness and additional student loan developments.

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