Student Loan Repayment

1/16/2025 Update on the SAVE Plan and Other Income-Driven Repayment Plans

The Department of Education has updated its guidance on the SAVE plan and other IDR plans. Here are the key changes:

• Extended Forbearance Timeline:
  • Borrowers in SAVE and other affected plans will remain in interest-free general forbearance until servicers can implement accurate billing systems, expected no earlier than September 2025.
  • First payments for borrowers in these plans will not be due until December 2025.
  • Borrowers do not need to make payments, and interest will not accrue during this period. However, this time does not count toward Public Service Loan Forgiveness (PSLF) or IDR forgiveness.
• Recertification Timeline Adjustments:
  • IDR plan anniversary recertification deadlines for SAVE borrowers are now set no earlier than February 1, 2026, with rolling deadlines thereafter.
  • Borrowers are encouraged to provide consent for auto-recertification to maintain enrollment.

• Forgiveness Provisions for IDR Plans:

  Forgiveness as a feature of any IDR plan created by the Department – specifically, the SAVE (formerly REPAYE), PAYE, and ICR repayment plans -- remains enjoined due to court rulings.

  • Borrowers can still receive forgiveness under the Income-Based Repayment (IBR) plan.
  • Payments made under SAVE, PAYE, and ICR will count toward IBR forgiveness if borrowers switch to IBR.
• Resumption of Application Processing:
  • Servicers have resumed processing certain IDR applications, including recalculations and recertifications for IBR, PAYE, and ICR.
  • Applications for SAVE remain paused due to ongoing litigation.
• PSLF Buy Back Program Expansion:
  • Borrowers will eventually be able to “buy back” months of PSLF credit for time spent in forbearance, even if they have not yet reached 120 months of qualifying employment.
  • Previously, this option was only available to borrowers with 120 months of qualifying employment.
• Clarifications on Consolidation Loans:
  • Borrowers with consolidation loans can only buy back months on their current consolidation loan.
  • Months from loans included in the consolidation or for periods prior to the first disbursement date of the consolidation loan cannot be bought back.

Opportunities to Access Support During the Transition to Repayment:

• Fresh Start – In April 2022, the Department of Education announced a one-time temporary program that offers benefits for borrowers with defaulted federal student loans, known as Fresh Start. All borrowers with defaulted federal student loans automatically gain access to some of Fresh Start’s benefits, including restored eligibility for federal student loans and grants (such as Pell Grants), stopped collections, eligibility for other government loans, a restored ability to rehabilitate loans, and credit reporting changes. By signing up for Fresh Start, borrowers will be able to gain access to additional benefits such as income-driven repayment (IDR) plans, student loan forgiveness programs, and short-term relief through forbearance and deferment of payments. 
  • Sign up online: https://myeddebt.ed.gov/
  • Sign up by phone: 1-800-621-3115
  • Sign up by mail: Write to P.O. Box 5609, Greenville, TX 75403. In your letter, include your name, social security number, date of birth, and the following: “I would like to use Fresh Start to bring my loans back into good standing.”

• On-ramp to Repayment – The Department of Education has created an on-ramp to repayment for all student loan borrowers to provide an additional grace period for borrowers who may be unable to immediately begin repaying their loans. The on-ramp to repayment will last for 12 months from the date that payments resume. During this period, borrowers will be able to make partial or late payments and miss payments without the associated consequences of negative credit reporting, default, or loans being sent to collection agencies. Borrowers do not have to take any action to qualify for this on-ramp; it is automatically available for those who need it.

Despite these benefits payments will still be due, and interest will still accrue during the on-ramp period. Missed payments will not count as payments made toward forgiveness in any repayment plans that lead to forgiveness.

• Saving on a Valuable Education (SAVE) Income-Driven Repayment Plan – (UPDATE: As of 7/17/24, the SAVE Plan is blocked from being implemented because of a federal appeals court ruling. Borrowers already enrolled in SAVE have been placed in interest-free forebearance. This page will be updated as more information becomes available.) The Department of Education recently finalized a new income-driven repayment (IDR) plan, the SAVE plan, that significantly reduces payments for the majority of enrolled borrowers and could make a meaningful difference in the monthly payment amount for all other borrowers. IDR plans are offered by the Department of Education to adjust the amount you repay toward your loan each month based on your monthly income. Although the Department of Education has offered IDR plans for almost 30 years, the SAVE plan is the most generous and affordable IDR plan. The SAVE plan has a range of benefits that began on July 1, 2023, and many others that will take effect in 2024 for enrolled borrowers. 
  • Immediate benefits (as of July 1, 2023)
    • Integration between the Department of Education and the IRS so you don’t need to resubmit your financial information when you recertify (renew) your IDR plan.
    • The ability for the Department of Education to use your financial information on file with the IRS to automatically recertify (renew) your IDR plan and update your payment amount based on any changes to your income.
    • End of interest capitalization when you leave an IDR loan, so that any unpaid interest on your student loan isn’t added to your principal balance. This means you won’t be on the hook for unpaid interest when you leave an IDR plan.
    • A more streamlined application allowing you to enroll in IDR plans, including the SAVE plan, in 10 minutes or less.
  • Benefits beginning on July 1, 2024 
    • An increase in the income exemption from 150 percent to 225 percent of the federal poverty line. This means that your monthly payment amount will likely significantly decrease and will be $0 if you are single and earn $32,800 or less or a family of four earning $67,500 or less, because more of your income will be considered essential income that won’t have to go toward student loan payments.
    • Elimination of all remaining interest after a scheduled payment is made under the SAVE plan, meaning that your loan balance will not grow if you make your minimum required monthly payment.
    • Exclusion of spousal income for borrowers who are married and file separately, meaning that your spouse will not have to cosign your IDR application.

• Student Loan Forgiveness Program – Because the Supreme Court struck down President Biden’s initial plan for broad student loan forgiveness in June 2023, the Department of Education is working on an alternative pathway to forgiveness using its authority under the Higher Education Act of 1965. The timeline for the development and finalization of this plan is not yet determined, as it will have to go through an extensive negotiated rulemaking process with public input.

What’s Next for Borrowers:

Date that interest on your loans will begin accruing: September 1, 2023

Anticipated due date for first payment: October 2023; your bill will arrive at least 21 days before your first payment’s due date in October  

End date for Fresh Start initiative: September 2024

End date for on-ramp to repayment: September 2024

Enrollment in the Department of Education’s new SAVE income-driven repayment plan: Apply by the end of summer 2023 to be enrolled in the plan in time for your first payment in October 2023

Key Steps to Take During the Transition to Repayment:

1. Check your loan information

• Log into your account at studentaid.gov to review your federal student loan details, their status (i.e. if you are in default), the repayment plan you’re enrolled in, and loan servicer information. The Department of Education also recommends that borrowers who were on auto-debit prior to the student loan pause reevaluate their status. If you’d like to continue with this program, you need to confirm your auto-pay enrollment with your student loan servicer.
• Up to 30 million borrowers may have a different loan servicer than they had in 2020 by the time payments resume. Find your loan servicer by logging into StudentAid.gov or calling 1-800-4-FED-AID (1-800-433-3243). Contact your servicer to understand your loan status and available repayment plans. If you had automatic payments before the pause on federal student loan payments began, you may have to manually set them up again. Make sure you’ve set up your online account with your new loan servicer and that your new servicer has your up-to-date contact info. Servicers expect a customer service bottleneck when payments resume, so get ahead of traffic now.

2. Update your contact information – While on studentaid.gov, update your contact information, and do the same on your loan servicer's website. If your loans were transferred during the pandemic, create an account with your new servicer.
3. Explore loan forgiveness options for federal student loans – President Biden's loan forgiveness plan was struck down, but there are other loan forgiveness programs available. See if you qualify for any of the following programs: 
   • Borrower Defense to Repayment – a forgiveness program available for borrowers whose college misled or lied to them, withheld important information, or engaged in other misconduct while the student was enrolled at the institution.
   • Total & Permanent Disability (TPD) Discharge – a forgiveness program available for borrowers who are unable to work because of an ongoing physical or mental disability or condition.
   • Public Service Loan Forgiveness (PSLF) – a forgiveness program available for borrowers who work in a public service profession in the public or private nonprofit sector and have made at least 120 qualifying payments on their loans. 
   • Closed School Discharge – a forgiveness program available for borrowers who were unable to complete their program because their college closed its doors.
   • Income-Driven Repayment (IDR) – borrowers who are enrolled in an IDR plan and have made consistent payments for at least 20 or 25 years, depending on their repayment plan, are eligible for forgiveness through IDR. 
4. Make a plan for how you’ll make payments – If you want to use auto-debit, enroll or re-enroll through your loan servicer’s website or by contacting your loan servicer.
5. Reconcile your monthly payments with your budget – Using the Department of Education’s Loan Simulator Tool, you’ll be able to preview how much you should expect to pay when payments resume. Your monthly payment amount will depend on your repayment plan. If none of the payment plans are affordable for you, deferment and forbearance allow you to temporarily postpone making student loan payments when you can’t afford them. 
6. Take advantage of the Department of Education’s temporary programs to support your transition to repayment – The temporary Fresh Start program, on-ramp to repayment, and SAVE IDR plan, all described on this page, are available to promote your financial security and make repayment more affordable and manageable.
7. Check your eligibility for the Department of Education’s one-time account adjustment opportunity and consider consolidating your loans into a new federal loan –The Biden Administration recently announced a temporary opportunity for borrowers to receive credit for payment periods that did not previously count toward forgiveness on an IDR plan or the Public Service Loan Forgiveness (PSLF) program. The Department of Education will review the account of every borrower who has at least one Direct Loan or Federal Family Education Loan (FFEL) program loan. The Department of Education will then identify all payments to be counted and instruct your servicer to update your account with an accurate payment count. If your loan is a commercially-held FFEL program loan (you can find out by logging into your account at studentaid.gov), you will need to apply to consolidate your loan into a Direct Consolidation Loan by December 31, 2023 to qualify for this opportunity. Learn more here.

What to Watch for:

• Incorrect payment amounts: If your payment amount seems wrong, contact your servicer. It’s possible they made a mistake. You may also be able to switch plans to get a lower monthly payment amount if there wasn’t a mistake. If you still think the payment amount is wrong, you can file a complaint with the Federal Student Aid Ombudsman.
• Loan repayment and forgiveness scams: Loan forgiveness scams often include a president’s name, like “Biden Student Loan Forgiveness.” For that reason, you may want to omit presidents’ names when you are searching for information about loan forgiveness. Make sure you work only with the Department of Education, Office of Federal Student Aid, and your loan servicer, and never reveal your personal information to anyone who contacts you about your loan. Emails from the Department of Education come from noreply@studentaid.gov and ed.gov@public.govdelivery.com. You can report a suspected scam to the Federal Trade Commission (FTC) by calling 1-877-382-4357 or by visiting reportfraud.ftc.gov. Warning signs of a scam include, but may not be limited to: 
  • Promises of immediate student loan relief
  • A request to pay money up front
  • A request for your social security number or other sensitive information
  • A claimed affiliation with a government agency
  • The use of high-pressure sales tactics
  • A request to sign a form giving them power of attorney
• High-interest refinance opportunities through private lenders: As your payments resume, private lenders may contact you with offers to refinance your federal student loans with them – sometimes with the promise of more flexibility with repayment, and opportunities to consolidate multiple federal loans into one private loan. Use discretion and practice caution when considering these options. On average, private loans have a higher interest rate than federal loans. Private loans cannot be refinanced back to federal loans, potentially stripping borrowers who originally had federal loans of the benefits associated with federal loans, such as the SAVE income-driven repayment plan, Fresh Start program, and various pathways to loan forgiveness available through federal loans.
• Other repayment options that may jeopardize your finances: Be cautious about repaying your student loans using a credit card or home equity line of credit (HELOC). Credit cards have significantly higher interest rates than federal student loans, and falling behind on payments could lead to a larger amount due in the long run and damage to your credit score. Using a HELOC to pay off or pay down your student loans can put your home at risk if you fall behind on your payments.

FAQs:

How long will President Biden's "Plan B" take to deliver financial relief?

President Biden's student debt forgiveness plan via the Higher Education Act will take time to implement, and its success is uncertain. It could take a year or longer to roll out, and a different administration could end the plan. I will continue to provide updates about the status of the new debt forgiveness plan as more details become available.

What’s my monthly payment amount going to be when payments resume?

Your bill that arrives in September or October will contain your payment amount. You’ll be able to visit your account on your servicer’s website to see your payment amount once your disclosure or bill has been sent. Make sure you know which servicer manages your loan(s). You can also get an estimate of your payment amount and compare repayment plans by using the Department of Education’s Loan Simulator.

What happens if I haven’t made a payment before or if I’m new to repaying my loans?

Your first payment will be due in October 2023, unless you left school recently (within the last 6 months) and will still be in your automatic grace period at that time.

Your monthly payment amount will depend on what repayment plan you choose. If you don’t choose a plan, you’ll be put on the Standard Plan that divides your total loan amount into monthly payments over 10 years (this plan is not based on your income). Compare repayment plans using the Department of Education’s Loan Simulator and consider applying for an income-driven repayment (IDR) plan. In the coming months, the Department of Education will implement the SAVE plan – its most affordable repayment plan ever created. Learn more about SAVE. Borrowers signed up for the current REPAYE IDR plan will be automatically enrolled in the SAVE plan.

You’ll get your first bill at least 21 days before your payment due date. Learn more about preparing for student loan payments to restart.

Can I pay ahead if I can afford to do so? 

Yes, you can make payments before they are due or pay more than the amount due each month. This can reduce the interest and overall cost of your loan. Contact your loan servicer to discuss these options.

What happens if I can’t pay my loan yet?

Borrowers will have a 12-month “on-ramp” period following the end of the student loan pause. During this time, payments will be due and interest will accrue, but borrowers will not incur late fees, penalties, or negative credit reporting for missing payments. Unlike the student loan payment pause period, however, missed payments will not count toward student loan forgiveness for income-driven repayment or Public Service Loan Forgiveness. If you cannot pay, find out if you qualify for an income-driven repayment (IDR) plan. As a last resort, you can also find out if you qualify for deferment or forbearance, which are periods of non-payment when payments won’t be due, but interest will continue to accrue and your loan balance will continue to grow.

How do I find out what my interest rate will be after the zero percent interest rate ends?

Contact your loan servicer for your exact interest rate, as some borrowers may experience changes in their interest rate. Your interest rate will also depend on the repayment plan you are enrolled in.

What does collection look like?

The Department of Education cautions borrowers about the consequences of loan default, which can include wage garnishments, negative credit reporting, and ineligibility for federal financial aid or deferment. Some of these consequences will be suspended for the next year for borrowers who take advantage of the Department of Education’s Fresh Start program.

Additional Resources and Information: The resources below include more information about the return to repayment.

• Access your loan details, view more FAQs, and learn more about the Biden Administration’s work to improve college affordability and student loan policies at the Office of Federal Student Aid’s website.

Webinars:

• Congresswoman Bonamici held a discussion on August 29th, 2024 with the Student Borrower Protection Center and The Institute for College Access and Success (TICAS) on the return to repayment. A recording can be viewed on YouTube.
• Congresswoman Bonamici hosted a series of workshops with Oregon Student Loan Ombuds Lane Thompson on repayment in Spring 2024. A recording of the Tillamook workshop can be viewed on this webpage and on YouTube.
• Congresswoman Bonamici held a webinar on January 10th, 2025 with the Student Borrower Protection Center and Oregon's Student Loan Ombuds to help student loan borrowers understand their rights and options going forward under the Trump administration. A recording can be viewed on this webpage and on YouTube.

Remaining questions and concerns:

Please contact my team if you have any specific questions or would like additional support with the resumption of payments on your federal student loan(s).