Payments on federal student loans have been suspended, without interest, since March 2020. After a 42 month hiatus, payments will resume for borrowers in October 2023. Borrowers are encouraged to make sure their contact information is up to date with their current loan servicer, as the U.S. Department of Education will notify borrowers when their specific payment is due this month.
More than three years of suspended payments is a long time. A lot can happen in borrowers’ lives. Below are seven tips to help prepare military families for student loan payment resumption this month:
- 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.
- 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.
- 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).
- 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.
- 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.
- 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.
- 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).
Active-duty, reserve and national guard service members serving in an area that qualifies for special pay may be eligible for an extension on zero percent interest on student loans for up to 60 months. To find out more, review FINRED’s website.
For additional information regarding student loan payment resumption, review the FSA Prepare for Student Loan Payments to Restart website.
Photo Credit: Vitalii Vodolazskyi/Adobe Stock
Written by Barbara O’Neill, Ph.D., CFP®, AFC® and Martie Gillen, Ph.D., MBA, AFC®, CFLE
Edited by Kristen Jowers, MS MFT
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