Student Loans

Federal student loan payments resume in October: What you need to know

Payments on federal student loans have been on pause since 2020. Fast forward to October 2023, and this respite comes to an end. 

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Millions of Americans will now have to incorporate these payments back into their financial plans.

According to Ted Rossman, Senior Industry Analyst at Bankrate, “The average student loan payment is about $400 a month. So it is really important to think about how this fits into your larger household budget. A lot's changed over the past few years. A lot of costs have gone up, so you definitely want to make sure that you have a good handle on things.”



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For some borrowers, this could be their very first time making these payments. Jill Desjean, Senior Policy Analyst at, notes, “People have been graduating. They've never actually been in that funnel of going through the repayment process. They may not know who their loan servicer is, which is the person you actually repay.”

To identify your loan servicer, visit and navigate to your account dashboard. Seek out the "My Loan Servicer" section and make sure all your contact details are current. As Jill Desjean recommends, “I would also say set up auto debt from your bank account. That makes it much easier to not have to have that one more thing to remember every month that you need to make your student loan payment.”

For those anxious about resuming payments, there are some options. Experts advise exploring income-driven repayment plans, and more importantly, a new plan launched by the Department of Education called the Saving On a Valuable Education or “SAVE”. This plan could even reduce your monthly obligations to zero. 

Ted Rossman states, “What it means is if you're a single person making less than about $33,000 a year, you may not have to make any payments at all. If you're a family of four, that cutoff is right around $68,000. So there's a chance that you may either not have to pay or you may be able to pay less.”

After the Supreme Court struck down his student debt relief program on Friday, President Joe Biden announced a set of new initiatives. “We’re not going to waste any time on this,” he said.

The SAVE plan is set to replace the current “Revised Pay As You Earn Plan” or (REPAYE). While it's currently in its beta testing phase, you can still apply. If you're already under the REPAYE plan, the transition to SAVE will be automatic.

One notable attribute of the new plan, as Jill Desjean mentions, is the eradication of negative amortization. “This new plan eliminates what's called negative amortization, which is when interest accrues at a greater rate than what you're able to pay down. So in any month, if you make a payment that doesn't cover the interest that is accrued, the difference, the balance of the interest that wasn't covered is just forgiven. It goes away. So students won't see their balances growing and growing as they make payments anymore.”

Starting next year, other benefits of the SAVE plan include:

  • Payments on undergraduate loans will be cut by 50%.
  • Those with principal balances of $12,000 or less can anticipate loan forgiveness after 10 years of payments.
  • Borrowers who are 75 days late on payments will be automatically enrolled in income-driven repayment, provided the Department of Education can access their tax records.

However, the White House effort to cancel student loan debt hasn't been without controversy. Two conservative groups are challenging the Biden administration in court over their initiative to cancel $39 billion in student loans for over 800,000 individuals. Responding to this, the Education Department said the lawsuit is “a desperate attempt” by these entities “to keep hundreds of thousands of borrowers in debt.”

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