How Borrowers Can Prepare for the Student Loan Repayment Restart

in Plan by Lacey Langford, AFC®

As the pause on loan payments comes to a close, it’s essential to gear up for the impending student loan repayment restart. Whether you’re reacquainting yourself with making these payments or facing them for the first time, preparations for your budget are in order.

Here’s what the restart is and some steps you should take to prepare for this transition to restarting student loan payments.

What is the Student Loan Repayment Restart

The loan repayment restart is the resumption of regular monthly loan payments and the end of the interest rate freeze on federal student loans. If you had your federal student loan payments temporarily paused due to the pandemic-related relief measures, you’ll need to resume making monthly loan payments, including payments toward the principal loan amount and any accrued interest.


The first payments are going to be due in October 2023. Your provider will send your bill with the payment amount at least 21 days before the due date.
Student Loan Repayment in the News

Before I jump into it, let me start with a quick history of why student loan repayments were paused and are now restarting. Student loan payments were frozen in response to the pandemic because of job losses, lots of uncertainty, and financial challenges as part of the Coronavirus Aid, Relief, and Economic Security Act… better known as the CARES Act. It was signed into law in March 2020 and included provisions to temporarily suspend federal student loan payments. The suspension, known as forbearance, applied to loans held by the federal government. It meant that borrowers with these loans were not required to make their regular monthly payments.


During the payment pause, interest on federal student loans was 0%, which meant that interest did not accrue or get tacked on to loan balances, even though payments were not being made. The main goals of pausing student loan payments were to quickly provide some financial relief so that people could meet their needs and prevent loan defaults.


Initially, the CARES Act suspended payments and set interest rates to 0% until September 30, 2020. However, as the pandemic’s impact went on, the relief measures were extended until now. The pause on student loan payments are coming to an end, so if you have a student loan you’re restarting payments on, it’s time to make a repayment plan and prepare your budget.

Does Repayment Restart Apply to You?

The student loan repayment restart applies if you took out any federal student loans, which are loans issued by the U.S. Department of Education. Repayment typically applies to these types of loans:


Direct Loans

These are loans made directly by the U.S. Department of Education. They include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans (for parents and graduate students), and Direct Consolidation Loans.


Federal Perkins Loans

These loans were previously offered to students with exceptional financial need. However, the Perkins Loan program was discontinued in September 2017, so not all borrowers have these loans.


Federal Family Education Loans (FFEL)

While new FFEL loans have not been issued since 2010, some borrowers may still have these loans. FFEL loans were issued by private lenders but guaranteed by the federal government.


Realated podcast: Preparing Your Finances for the Student Loan Repayment Restart


Steps to Prepare for the Student Loan Repayment Restart


Review Your Loans

Start by taking inventory of all your student loans. Make a list of each loan’s balance, interest rate, and repayment terms. Creating an overview will help get a better understanding of what needs to be done.


If you aren’t sure about how much student loan debt you owe or to whom, you can log into the Federal Student Aid website and get access to all of your federal student loan information. You’ll need your Federal Student Aid ID to be able to view your loan balances, loan servicer details, and repayment status. If that doesn’t work, you can contact your loan servicers directly if you know who they are, or you can request a free copy of your credit report.


Update Contact Information and Review Loans

While you’re in your Student Aid account, be sure to update all of your contact information to ensure you receive important notifications and updates about your loan as soon as possible.


While you’re there, it’s a good time to brush up on the terms and conditions of your loans. Look over the interest rates, grace periods, and any potential penalties for missed payments.


Reassess Your Budget

Review your monthly budget to make sure you have additional cash to make payments. If not, you’ll need to evaluate and adjust your budget to free up money to make loan payments. Or, if necessary, create a side hustle to earn extra cash for student loan payments.


Set Up Auto Pay

Consider setting up auto payment via to make sure you don’t miss any payments and to save 0.25%. The interest rate discount is given as an incentive to set up automatic payments.


Use your SCRA Benefit

If your loan qualifies under the Servicemember’s Civil Relief Act (SCRA), you could possibly have your student loan interest reduced. The SCRA provides certain protections for active-duty service members, including capping interest rates at 6% on loans you took out before entering active duty.


Related post: How to Get the Most out of Your Servicemember’s Civil Relief Act Benefit

Explore an Income-Driven Repayment Plan

If your military pay varies due to things like a PCS that can cause military spouse un or underemployment, consider income-driven repayment plans. These plans adjust your monthly payments based on your income, which can help during times of reduced pay.


Consider Refinancing or Consolidation

If you have multiple federal loans with different interest rates, loan consolidation could simplify your repayment process. Private loan refinancing might also be an option to explore if you can secure a lower interest rate.


Build an Emergency Fund

Since you’re reviewing and getting your finances in order for repayment, now might be a good time to start or build up your emergency fund. Unexpected costs and financial emergencies happen all of the time. Having a full emergency fund will give you a safety net and reduce the risk of missing payments when financial challenges come up.


Use Public Student Loan Forgiveness

You might qualify for Public Student Loan Forgiveness for active-duty service or if you are in public service or education, may offer opportunities to have a portion of your loans forgiven after a certain period of service.


Related podcast: Public Student Loan Forgiveness



Plan for Transition

If you’re transitioning out of the military, understand how your student loan repayment obligations might change. Explore options for continuing repayment or seeking deferment during the transition.


Take Advantage of Free Financial Professionals

If navigating the world of loan repayment is overwhelming, take advantage of free financial counselors on your installation or MilitaryOne Source. They can provide personalized help based on your unique financial situation.


Related post: How to Get a Free Financial Counselor in the Military


The long pause on loan repayment and their restart will have an impact on your finances. Getting a head start now on preparing your budget can help you minimize financial challenges that can come from restarting student loan payments. This time can be a good opportunity to take control of your money and reach your financial goals.


Featured photo Photo by Staff Sgt. Jensen Stidham