Disclaimer: Information about federal student loans is rapidly changing. This blog is current as of July 20, 2023.

If you were depending on student loan debt relief, you may need to adjust to the recent news that student loan repayment will be resuming soon without the anticipated debt relief. Based on the recent Supreme Court decision, the one-time student loan debt relief program will not be going forward (Biden, President of the United States, et al. v. Nebraska et al., 2023). This federal income-based program intended to provide a one-time student loan debt relief of up to $10,000 (up to $20,000 for Pell grants) to those who qualified. Borrowers who applied for this debt relief last fall should have received an email about the recent ruling that halts the program.

End of federal COVID-19 public health emergency

As of May 12, 2023, the federal public health emergency declaration issued back in 2020 is no longer in effect (CDC, 2023). In addition to the one-time debt relief program, student loan payments were paused during the federal COVID-19 public health emergency. The end of the public health emergency also puts an end to the student loan payment pause. According to the Federal Student Aid Office (2023), interest charges on federally held student loans will resume starting on September 1, 2023 with payment deadlines starting in October. For those borrowers that were expecting debt relief, the return of interest charges may be an added challenge to your financial plan.

Transition back to student loan payments

According to the U.S. White House statement (2023), borrowers who miss payments during the upcoming school year from October 1, 2023 to September 30, 2024 will not be reported to credit bureaus, placed in default, referred to collection agencies, or considered delinquent as part of a 12-month "on-ramp" initiative.

The Federal Student Aid Office (2023) recommends the following steps for preparing student loan borrowers:

"How should I prepare for student loan payments to restart?

1. Make sure you know which loan servicer is yours.
2. Update your contact information in your profile on your loan servicer’s website and in your StudentAid.gov account.
3. Consider applying for an income-driven repayment (IDR) plan. An IDR plan can make your payments more affordable, depending on your income and family size. This summer, we will begin implementing the SAVE plan, which is our most affordable repayment plan ever. More information about SAVE can be found below. Borrowers signed up for the current REPAYE plan will be automatically enrolled in SAVE.
4. Review your auto-debit enrollment or sign up for the first time to automatically deduct your monthly payment from your bank account. To do so, log in to your loan servicer’s website or contact your loan servicer directly. If you were enrolled in auto-debit before the payment pause and you would like to resume when payments resume, you need to confirm your auto-pay enrollment with your student loan servicer if you haven’t already done so."

A recent announcement provides some additional information on the new SAVE plan that is intended to replace the REPAYE plan.

If your student loans are in default, there is a temporary program called Fresh Start that may be an option for getting your credit back on track. Find out if your loans are eligible and learn more about the Fresh Start student loan program.

Student loans may be complicated, especially with some of the current changes and new options available. For more information on the recent changes regarding student loans, a webinar series is offered by the University of Illinois Student Money Management Center.