Preparing for the Comeback of Student Loan Collections

Get Ready for Student Loan Payments!

After an extended break of over three years, federal student loan payments in the U.S. are back on track.

The silver lining? With some foresight and planning, you can navigate this transition with greater confidence and ease.

What Took Place During the Pause?

In 2020, at the onset of the pandemic, the federal government temporarily halted payments and interest on federal student loans under the CARES Act.

This suspension was prolonged multiple times until, in 2023, following the debt ceiling agreement from Congress, it was confirmed that payments would recommence in October of that year.

What About Loan Forgiveness?

President Joe Biden had introduced a comprehensive student loan forgiveness plan aimed at assisting millions of borrowers. Unfortunately, the Supreme Court intervened and blocked this proposal in mid-2023.
As of 2025, students will be required to restart their loan payments.

How to Get Ready for Payment Resumption?

If bills are arriving or about to land in your mailbox — stay calm. Here are some practical steps to help you organize:

1. Verify Your Loan Status

Head over to StudentAid.gov to find out:

• Your loan amount and type;
• Your loan servicer (some accounts transferred during the pause).

Understanding your current status is crucial for mapping out your next steps.

2. Refresh Your Contact Details

Ensure your contact information—address, phone number, and email—is current both on the government’s portal and with your loan provider.

This ensures you receive vital updates regarding payment deadlines, amounts, or any modifications to your loan.

3. Reassess Your Budget

Now is the perfect opportunity to organize your finances. As payments resume, it’s crucial to understand your income, expenses, and how much you can allocate each month for your loan.
Consider using simple tools like spreadsheets or financial apps to assist you.

What Are Your Payment Choices?

Income-Driven Repayment Plans

Income-driven repayment plans tailor your monthly payments based on your earnings and family size.

The new SAVE plan can greatly lower your monthly payments and may even lead to loan forgiveness after a set time.

Consolidation: Simplify Your Repayment

If you have several federal loans, consolidating them into one can simplify repayment, allowing you to manage just a single monthly bill.

Refinancing: Proceed With Caution!

While refinancing with a private lender may lower your interest rate, be wary: you could forfeit federal loan benefits, like IDR plans and deferment options.

It’s a choice that requires careful consideration.

Deferment or Forbearance: When Times Are Tough

If you’re facing financial difficulties, you might qualify for a temporary deferment or forbearance on your loans.

Be cautious: interest can still build up during these breaks. Use these options wisely and sparingly.

Beware of Scams!

As payments restart, scammers are back too. Some companies may claim “guaranteed forgiveness” for hefty fees — these offers are typically scams.

Keep in mind: the federal government will never charge you to sign up for repayment or forgiveness programs. Stay wary of odd messages, unreliable links, or miracle claims.

Always verify information from reliable sources like StudentAid.gov.

What Happens if I Ignore the Debt?

Overlooking your student loans can result in severe outcomes, like:

• Harm to your credit score;
• Loss of federal benefits;
• Interest growth and debt collection;
• Potential garnishment of your tax refund.

Student debt won’t just vanish. However, it can be managed — and it starts with taking initiative and planning.

Tips for the Long Haul

Getting back into the groove of student loan payments requires some adjustments, but a few simple changes can make a big difference:

• Set up autopay: Many servicers provide a slight interest rate cut (usually 0.25%) when you enroll in automatic payments.
• Create an emergency fund: A small cushion can help you avoid missed payments when finances are tight.
• Explore forgiveness options: If you work in public service or for a qualifying nonprofit, check out Public Service Loan Forgiveness (PSLF) and similar programs.

Written by

admin