Student Loan Interest Resumes Sept. 1 — What This Means and How To Prepare for Payment Restart in October

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Since March 13, 2020, federal student loan borrowers have enjoyed 0% interest rates and paused payments. But this Friday, interest will begin accruing again ahead of payments that restart in October. You won’t have to pay the interest right now or worry about interest capitalizing during the pause. However, you could see your student loan balance continue to grow if your payments aren’t high enough to cover the accruing interest.

Additionally, resuming student loan payments are leading to a lot of confusion among borrowers, The Wall Street Journal reported. Along with understanding your new payment schedule and changes to repayment options, you might have a new student loan servicer that’s hard to get in touch with. To better prepare for resuming interest and payments, here are some steps you should take now.

Check With Your Loan Servicer ASAP

Get in touch with your student loan servicer far before repayment resumes. That way you can review your account information and get support ahead of potentially long wait times. If you don’t know your servicer, you can log in to your account and look under “My Loan Servicers.” You should also receive a letter or email identifying the servicer before payments resume.

You can use your account on the servicer’s website to see your student loan balances, interest rates, payment amount and due date. When you check your personal and payment information, update any if it has changed, and contact the servicer ASAP if you notice any problems. You may also want to check the servicer’s site for ways to get help making payments or to see simulations for different repayment plans.

Save for Your Future

Reconsider Your Repayment Plan

If your payments are too expensive, it’s worth looking at different income-based repayment options that could lower them and eventually lead to loan forgiveness. A new option is the Saving on a Valuable Education (SAVE) payment plan, which replaces the Revised Pay as You Earn (REPAYE) plan.

This plan sets the minimum adjusted gross income (AGI) to have to make any payments to 225% of the federal poverty level. While it will at first cap your payments to 10% above that AGI amount, you’ll pay a lower 5% toward undergraduate debt starting in July 2024. Loan forgiveness happens after as few as 10 years of on-time payments if you borrowed $12,000 or less; otherwise, it’s 20 years. Another notable feature is that you won’t have unpaid interest added to your balance anymore.

You’ll be automatically moved to this plan if you’re currently on REPAYE. Otherwise, you can contact your loan servicer for advice on repayment plans, or you can apply for SAVE on

Explore Options for Further Pausing Payments

Although the federal payment pause is ending, student loan deferment and forbearance through your loan servicer are still options. Deferment pauses your payments temporarily while forbearance either lowers or pauses them. Note that interest will still accrue if you’re deferring unsubsidized loans.

You could qualify for a deferment or forbearance for reasons such as facing severe financial hardship, serving in the military or being a healthcare resident or intern. Deferment is also possible if you’re at least a half-time student at an eligible school. You’ll need to contact your loan servicer to see their permitted reasons for deferment or forbearance and to learn about application and documentation requirements.

Save for Your Future

Begin Planning To Pay

Make a note of your next student loan payment date and review any autopay settings so you don’t end up with a missed payment. You’ll then want to look at your budget and cut any unnecessary expenses so you can start saving for your payments. It may also be worth looking into secondary income options for an extra financial cushion.

If you do end up having trouble paying your federal loans, know that the Biden administration has announced an on-ramp period for the first 12 months of payments resuming. You’ll still accrue interest and owe payments as usual, but if you miss any, you can avoid interest capitalization and credit score damage during that period.

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