When does federal student loan payments resume? Live update

Last updated on November 15th, 2024 at 12:47 pm

From March 2020, lockdowns began in different countries worldwide. Consequently, the United States of America temporarily paused all federal student loan payments. The question in many people’s minds was: When does Federal Student Loan Payments Resume? In this article, we explored the payment resume date which helped people a lot.

When Does Federal Student Loan Payments Resume?

Federal student loan payments resumed on October 1, 2023. After a pause of more than three years, borrowers are now expected to begin repayments. There is an on-ramp period from October 1, 2023, to September 30, 2024, which helps borrowers adjust payments. During this period, borrowers who miss payments will not be considered delinquent, though interest will still accrue.¹

The Saving on a Valuable Education (SAVE) plan has been introduced to provide debt relief under Secretary of Education Miguel Cardona. This plan replaces the previous Revised Pay-As-You-Earn plan. Under the SAVE plan, payments are based on income and family size, capping at 5% of a borrower’s discretionary income (down from 10%). Borrowers earning less than $33,000 per year may see payments reduced to zero, while others will save about $1,000 yearly.

Do Federal Student Loans Accrue Interest While in School?

Yes, federal student loans accrue interest while you’re in school. Different types of loans handle interest differently, though. For example, subsidized loans have their interest paid by the government while you’re in school and for six months after graduation, while unsubsidized loans accrue interest from disbursement, though payments aren’t required until after graduation.

Do Federal Student Loans Need to Be Paid Back?

Yes, federal student loans must be paid back. Unlike grants or scholarships, which are “free money,” student loans are borrowed funds that must be repaid with interest. Understanding your repayment options and planning to repay your loans is essential.

What Decision Did the Supreme Court Make in 2023?

The Supreme Court blocked the Biden administration’s student loan forgiveness plan, which had proposed canceling up to $20,000 for eligible borrowers.² However, President Joe Biden has indicated plans to pursue loan relief under the Higher Education Act of 1965. This process could take time due to necessary public hearings and feedback periods, and it may face legal challenges.

When Did Interest Start Again on Federal Student Loans?

Interest on federal student loans began accruing on September 1, 2023. Following a decision in June 2023, interest resumed for all federal student loans, even though the first payment due date was October 1, 2023. Borrowers who began payments were encouraged to enroll in a plan such as the SAVE plan to manage monthly obligations.

Are Federal Student Loans Suspended Anymore?

No, federal student loans are no longer suspended. Although the repayment pause and interest suspension extended through September 30, 2023, all borrowers are now expected to resume payments, beginning October 1, 2023.

Is Federal Student Loans Forgiven?

There are specific circumstances where federal student loans may be forgiven, canceled, or discharged. For example, borrowers working in public service roles may be eligible for PSLF after a certain period. Additionally, loans may be discharged for total and permanent disabilities. Loan forgiveness is not automatic and requires a separate application.

Conclusion.

In summary, federal student loan payments in the United States resumed on October 1, 2023. This restart came after numerous extensions throughout the pandemic. While payments have resumed, many borrowers are adjusting through options like the SAVE plan, designed to provide manageable payment structures based on income. Stay tuned to our website Kabbage Loan Guide for the latest updates on federal student loan policies and repayment options.

Faq’s

Thanks for your visit.

1. Student Aid [↩]
2. BBC [↩]