Student loan repayments have resumed - what you need to know

Student loan repayments have officially resumed as of yesterday (October 1) after the years-long moratorium.

Since March 2020, the Federal Government has placed a pause on student loan repayments as part of Covid-era financial relief.

As of last month, interest has started accruing on student loan debt once again and now repayments will need to be made.

There have been multiple attempts to extend the moratorium from President Joe Biden and Democratic legislators, however, these have been blocked by Congress.

Here is what student loan borrowers need to know about their repayments

When are repayments due?

Borrowers will begin paying back their student loans in October and should receive a billing statement or equivalent notice 21 days before the first payment’s due date.

The Education Department recommends people get in contact with their service provider if they have not yet received a billing statement.

It should be noted that interest started accruing on repayments from September 1, despite the moratorium ending in October.

To find out how much is owed, borrowers can log into their account to learn the amount and when payments need to be made.

What is my repayment plan?

The majority of borrowers are automatically enrolled into a standard repayment plan, which is a decade-long schedule to reduce balances but this is often the most expensive option

Those concerned about paying back loans are encouraged to consider alternatives, such as the Saving on a Valuable Education (SAVE).

This is a new income-based repayment option from the White House and could lower repayments for 20 million borrowers.

However, this initiative is primarily open to Americans with direct subsidized and unsubsidized loans, and the full impact of the repayment plan will not come into effect until next year.

Melanie Carter, the associate provost and director for the center for HBCU Research, Leadership at Howard University, cited initiatives like this as being helpful for borrowers following the moratorium.

She explained: “The student loan payment moratorium was extremely helpful to borrowers during the global pandemic and beyond.

“Though the moratorium has ended, the Biden Administration continues to implement strategies to make loan payments more affordable and realistic.

“The moratorium was an opportunity to better understand the impact of student loan debt, the reasons for the reliance on student loans, and develop ways to create a student loan strategy that facilitates access to higher education without taking on massive debt.”