Get Financially Ready for Federal Student Loan Repayment

The federal student loan payment pause is officially over. As part of the “Fiscal Responsibility Act of 2023,” interest on federal student loans began to accrue on September 1, 2023. Student loan payments will resume in October.

As this due date approaches, millions of student loan borrowers who have not been required to make payments on their student debt are gearing up to start repaying – which is likely to have a considerable impact on their monthly budgets.

VantageScore is here to guide you with steps you can take to prepare yourself financially and help in a smooth transition.
Here are some actionable tips to help you navigate the start of student loan repayment with confidence:

Review Your Monthly Budget and Finances

Before you start making a monthly payment, take a moment to review your full financial picture. Assess your income, expenses, debt, and savings to understand how much you can comfortably allocate toward your federal student loan payment.

Tip: Create a monthly budget that includes your student loan payment as a fixed expense. This will help you manage your finances more effectively and avoid any surprises.

Knowledge is Power: Understand Your Student Loan Details

It’s crucial to have a clear understanding of your loan details, including the interest rate, remaining balance, and repayment terms to formulate a sound repayment strategy. You can review your personal loan balance and details by logging in to your Federal Student Aid account as well as through your loan servicer account. 

Contact your loan servicer for support if you need help understanding the details or exploring your options. Your loan servicer can help you with payments, repayment plans, and loan forgiveness programs.

Tip: Follow these steps if you need to find out who your student loan servicer is or how to contact them:

• Log in to your Federal Student Aid Account dashboard
• Find the “My Aid” section
• Select “View loan servicer details”
• If you are unable to log in, call the Federal Student Aid Information Center at 1-800-433-3243

Explore Student Loan Repayment Options

Are you on the right repayment plan for you? As you prepare for student loan payments to resume, it’s crucial to explore the various repayment options available to you. These might include income-driven repayment plans, which adjust your monthly payments based on your income and family size, offering a more flexible approach to loan repayment.

Tip: Learn more about the different income driven repayment plan options in this extensive article developed by VantageScore in partnership with Dan Currell, former Deputy Under Secretary and Senior Advisor at the U.S. Department of Education:
39 Answers to Student Loan Questions-Repayment Plans

Finalize Your Payment Details

Borrowers should receive a billing statement or other notice from their loan servicer(s) before payments are due in October 2023. This notice will include your payment due date, upcoming interest, and payment amount. (You can also log in to your loan servicer’s website, call, or email to find out your monthly payment amount.) Your federal student loan payment will be due no sooner than 21 days after your servicer sends the billing statement. You can pay your student loans through your account on your loan servicer’s website.

Tip: Make sure your personal information is accurate and your loan servicer has your most up-to-date contact info to ensure you don’t miss important messages about your payments.

Understand What Happens if You Miss a Payment

Unfortunately, not everyone will be able to make their payments. The Department of Education is providing an on-ramp period to support borrowers as federal student loan payments restart in which borrowers will be protected from having a delinquency reported to credit reporting agencies. Though missed payments will not be reported as delinquent during the on-ramp period, student loan interest will continue to accrue. Borrowers do not need to request or enroll in the on-ramp. If your loans were eligible for the payment pause, you are eligible for the on-ramp. The on-ramp period is scheduled to last through September 30, 2024.

Tip: Find answers and further details to questions like what to expect if you miss payments (or whether you can stop them altogether) in the FAQs section of VantageScore’s Federal Student Loan Repayment Resources page.
Learn more: Student Loan FAQs

Establish an Emergency Fund

An emergency fund serves as a financial safety net to help you cover unexpected expenses that could potentially disrupt your student loan repayment plan.

Tip: You can create a separate savings account or automate savings through your online banking app, which you can use for student loan payments.

Stay Up to Date on Student Loan News and Policy Changes

In the ever-changing landscape of student loan policies, staying informed is key. Being aware of policy shifts and available debt relief programs can provide you with opportunities to better manage your student loan debt.

Tip: Explore the VantageScore Student Loan Repayment Resources, FAQs & News page and stay in the loop with the latest developments in student loan interest rates, legislative changes, and updates on debt relief measures.
Find it here: Latest News and Updates on Federal Student Loans

Resumption of loan payments after a lengthy pause can be challenging both from a financial standpoint for consumers as well as a practical standpoint. It can be a significant transition, but with careful planning and preparation, you can navigate this period successfully, secure your financial stability, and maintain a healthy credit file while fulfilling your repayment obligations.

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