April 13, 2021

When Does Student Loan Repayment Start?

Recent student loan debt statistics show that over 45 million borrowers owe a record $1.7 trillion. However, the COVID-19 pandemic prompted the government to pause student loan repayment to alleviate financial burdens. This means millions of borrowers were granted the right to stop payments without incurring added interest or penalties.

President Joe Biden has extended former President Donald Trump’s loan forbearance initiatives until September 30, 2021. This article will discuss how such programs will impact student loan repayment.

Student Loan Forbearance Regulations

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has automatically put federal student loans into administrative forbearance. This program allows you to stop making payments during the forbearance period without taking any action toward receiving its benefits.

Student loans that fall under the CARES Act will incur zero percent interest until September this year. These conditions also apply to qualified defaulted loans.

However, you have the option to repay student loans voluntarily during the forbearance period. Any amount you pay will reduce the principal balance on your loan(s).

Qualified Loans

Federal student loans owned by the U.S. Department of Education (DE) fall under the CARES Act. The pause on payments and interest will apply to these qualified defaulted and non-defaulted loans:

  • Direct Stafford Loans
  • Graduate (PLUS) Loans
  • Direct Parent PLUS Loan
  • Direct Consolidation Loans
  • Commercially-owned Federal Family Education Loans (FFEL)

You can check your student loan details in your Federal Student Aid account under the relevant loans tab.

Payments made on any of these qualified loans during the forbearance period are eligible for a refund. Credit bureaus will restore these loans to good status and remove delinquency marks from your credit report.

If your loan is not under the qualified list, there are other available options to pause or repay.

  • Non-DE loans will continue accruing interest, but you can request administrative forbearance with your loan servicer.
  • Subsidize your loans with economic hardship or unemployment deferment.
  • Check for refinancing options for private loans. You may also refinance federal student loans, but you might lose federal borrower benefits.

Student Loan Repayment Schedule

When does student loan repayment start? As long as there is an ongoing forbearance program, you do not have to worry about missing payments.

President Donald Trump paused payments for federal student loans until September 30, 2020, which he later extended until January 31, 2021. Before the January 31 deadline, President Joe Biden announced further extension until September 30, 2021. There are also proposals from Congress to cancel specific debt amounts per borrower.

Keep yourself informed through forbearance updates from Federal Student Aid. Repayments should start as soon as the administrative forbearance ends.

Your loan servicer should send you a notification via email or mail before resuming collections. If you need more information about your loan servicer, you can check on your Federal Student Aid account who your servicer is, or call 1-800-433-3243.

Reduce Your Financial Stress

The government’s forbearance programs can play a crucial role in reducing your financial stress. Even if you don’t have to make payments on your federal loans now, consider paying what you can if you can afford it and don’t have other debt. Doing so can drastically reduce your debt-to-income ratio and help you achieve your financial goals.

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