Student Loans 2023: Top 5 Things That Gen Z Needs To Know


With federal student loans on pause for over three years, many Gen Z graduates haven’t had to worry about monthly payments for an extended period of time. In 2023, Americans need to prepare for the reality that payments are likely to resume again and how that might look during a time of high inflation.

In a time where affording groceries and basic everyday necessities is straining many budgets, payment resumption is likely to worsen the already harsh economic climate. However, Gen Zers can make smart money moves now in order to be as prepared as possible for payments to start up again. 

Here are five things Gen Zers should know about student loans in 2023.

Will Payments Resume?

After over three years of no student loan payments and continual delay of payment resumption, it’s fair to question whether payments will ever start back up.

According to the Federal Student Aid website, student loan payments are scheduled to restart either 60 days after the Supreme Court reaches a decision regarding President Biden’s student loan forgiveness plan or 60 days after June 30, depending on which occurs first.

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Will Interest Rates Increase After Payments Resume?

In light of the high inflation rates affecting all, but especially young, Americans, Gen Zers are understandably concerned as to how rising costs will affect their loans.

For the majority of young people with student loans, interest rates will likely be the same as they were before the pause. However, for those who consolidated loans during the payment pause, interest rates may change. 

Be sure to contact your loan provider to obtain your exact interest rate and make sure you are financially prepared for your monthly payment requirements before payments begin again.

Will Payment Amounts Change After the Pause?

While your interest rate might not change much despite the pause, the amount you need to pay monthly may be affected. 

For Gen Zers on a traditional repayment plan — which includes those on a standard, graduated or extended repayment plan — loan servicers may recalculate your payments after the pause. Your payments will be recalculated based on your current payment place of principle and interest as well as the amount of time remaining in your repayment period.

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For borrowers on an IDR (income-driven repayment) plan, your payments will stay the same as they were before the payment pause. 

While student loan repayment dates and payment amounts might be up in the air, there are a few sure tips experts recommend taking advantage of in order for paying back loans to be the most seamless process possible. 

Employers Can Help With Student Loan Repayment

As young Americans are entering the workforce and earning entry-level pay, having employer assistance when it comes to large loan repayment expenses can be immensely helpful. 

“Employers can pay up to $5,250 a year toward an employee’s student loan debt and the payments are 1) tax-free to the employee and 2) a tax-deductible business expense for the employer,” said Patricia Roberts, chief operating officer at Gift of College Inc.

Be sure to ask your employer if they offer student loan repayment benefits or if they are willing to offer these features to employees. Many employers know the financial and emotional strain of having higher education debt and want to help their employees.

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“Helping employees with the repayment of student loans can lead to improved employee engagement and retention and is certainly a wonderful recruiting tool to distinguish a company from the competition in a competitive marketplace,” Roberts said. 

Consider an Income-Based Repayment Program

If your monthly student loan payments are going to be more than you can afford, switching to an IDR plan can help lower your minimum payment amount.

“The new IDR guidelines not only cap payments at 5% of your discretionary income (it was 10%), but they also [say] if you do not pay enough to cover the interest, the loan will not grow,” said Jay Zigmont, PhD, CFP® and founder of Childfree Wealth. “There are also some even better terms for community college grads and others.”

If you are interested in switching to this type of plan, you can fill out this form to apply and work with your loan servicer to evaluate and change your payment plan. 

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About the Author

Maddie Duley is a content intern for ConsumerTrack writing about finances for GOBankingRates. She is currently pursuing a bachelor's degree in communication and design from the University of California Davis.
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