Interest will start accruing again on September 1, after rates were effectively set to 0% since March 2020 for federal student loans. Now, interest rates, which are fixed and vary by loan, will return to the same rate they were before the freeze.
For most borrowers, the first payment will be due sometime in October – but not everyone has the exact same due date.
Borrowers can expect to receive their bill, listing their payment amount and due date, at least 21 days beforehand.
Generally, borrowers can expect their monthly payment to be the same as it was before the pandemic pause. Unless a borrower made optional payments or other changes to their account, like consolidating their loans, federal student loans were essentially frozen in time.
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After several extensions by both the Trump and Biden administrations, the pause will finally expire this fall after Congress prohibited the president from extending it another time.
Income-driven plans tie monthly payments to a borrower’s income and family size and don’t take the amount of debt or interest rate into account.
But note that if a repayment plan lowers monthly payments, it may also increase how much is paid back over time due to interest and extend how long it takes to pay the loan off.
Borrowers should expect it to take about four weeks for a loan servicer to process an income-driven plan application, Biden administration officials have said.
But for the next year, through September 30, 2024, the government is providing what it’s calling an “on-ramp period,” during which borrowers are shielded from other normal consequences of missing a payment.
This pathway requires the Department of Education to undertake a formal rule-making process, which typically takes months or even years – and could still face legal challenges.
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