Student Loan Repayments: What You Need to Know

It’s a complicated time for student loan borrowers. Several new programs have been announced, and payments have resumed. Read on for a summary of what you need to know.

Payments Resumed Fall 2023 

Student loan payments for federal student loan borrowers resumed in fall 2023 after a three-year pause imposed as a COVID-19 relief measure expired. The 2023 debt ceiling agreement prevented further extensions of the payment pause, and the Department of Education (ED) began collecting payments in fall 2023. Interest resumed September 1, 2023, and payments restarted in October 2023. Your student loan servicer should have contacted you with your due date and payment amount before your payments were due.

President Biden & ED Offer Alternative Ways for Federal Student Loan Debt Relief

In August of 2022, President Biden announced the Biden-Harris Administration’s One-Time Debt Relief program designed to help borrowers with the burden of student loan debt. This program would have provided eligible student loan borrowers  with up to $10,000 in cancellation and up to $20,000 in debt cancellation for Pell Grant recipients.

However, lawsuits put the program on hold. The U.S. Supreme Court heard arguments in February 2023, and NASW was disappointed that on June 30, 2023 the Supreme Court struck down the plan, ruling that the President cannot cancel student loans through Executive Action. This means the Department of Education cannot proceed with Biden's plan to issue $10,000-20,000 in debt relief for borrowers.

Although the Supreme Court struck down President Biden’s federal student debt cancelation plan for 40 million borrowers, President Biden’s “Plan B” Response to the Court’s ruling and the U.S. Department of Education’s (ED’s) Income-Driven Repayment (IDR) Account Adjustment now offer alternative ways for student debt relief. 

President Biden’s Plan B Response, announced the same day as the Court’s strike down, uses the Higher Education Act to begin a new process through “negotiated rulemaking” to establish a new debt relief/cancelation program. In July 2023, the Department of Education held a virtual public hearing on their new plan for federal student loan debt relief. 

As federal student loan payments resumed in fall 2023, President Biden announced another plan, the “12-month on-ramp” to repayment, that bars the Department of Education from reporting delinquent borrowers who have missed payments to credit agencies for 12 months. The 12-month “on-ramp” began October 1, 2023, and will conclude on September 30, 2024. After September 30, 2024, missed payments will be reported to credit agencies as usual and borrowers that have missed payments can be sent into default.

A New Way to SAVE

Since summer 2023, all student borrowers in repayment are eligible to enroll in a new income-driven repayment plan called Saving on a Valuable Education (SAVE). Described in President Biden’s June 30 Plan B Response, SAVE will cut borrowers’ monthly payments in half, allow many borrowers to make $0 monthly payments, save all other borrowers at least $1,000 per year, and ensure borrowers don’t see their balances grow from unpaid interest. SAVE will replace the existing Revised Pay as You Earn (REPAYE) plan, and any borrowers currently enrolled in REPAYE will be automatically moved to SAVE and have their payment recalculated under the new plan. The SAVE plan changes the discretionary income requirements, meaning less of your income will be included when calculating your payment and a lower monthly payment. In the summer of 2024, this plan will begin to calculate monthly payments at 5% of your discretionary income for undergraduate loans, down from the current 10%. For borrowers with both undergraduate and graduate loans, your monthly payment will range from 5-10% of your discretionary income, depending on your ratio of undergraduate to graduate loans. Learn more about SAVE in this U.S. Department of Education fact sheet.

As of August 2024, the SAVE plan has been placed on hold due to ongoing lawsuits. Any borrower enrolled in SAVE will be placed in a temporary forbearance until the lawsuits are resolved. Unfortunately, this forbearance period will not count towards PSLF. 

A Fresh Start for Borrowers in Default

For borrowers who are in default, the Department of Education created a new program called Fresh Start, designed to bring you out of default and back into good standing quickly and easily. To take advantage of this program, call your collections agency and tell them you’d like to opt-in to Fresh Start. You’ll be transferred to a new servicer, brought out of default, and your loan will be reported as in good standing. The process only takes about a month, so if you’re in default, call your collections agency to opt in today.

Account Adjustments

The Department of Education (ED) is reviewing borrowers’ accounts to give them credit for past payments that didn’t previously count. These one-time improvements will adjust a borrower’s account by awarding credit for:

• Any month in repayment, even if payments were partial/late, the wrong loan type, or the wrong repayment plan,
• Extended periods of forbearance,
• Any month spent in deferment (exception for in-school deferment) prior to 2013.

These adjustments are expected to take place in the first half of 2024. To receive the credit toward Income Driven Repayment and/or Public Service Loan Forgiveness (PSLF), loans must be Direct Loans or FFEL loans managed by the Department. Credit toward PSLF requires the borrower to have certified qualifying employment that overlaps the same periods.

If You Need Help Navigating New Student Loan Repayment Programs

If you are concerned about your eligibility under new programs, or about your ability to make your payment, you can explore personalized repayment options using the NASW Savi tool at NASW.bySavi.com. NASW partnered with Savi, a student loan technology company that provides resources and expertise to help members understand, manage, and repay student loan debt.

The free Savi Student Loan Tool analyzes your repayment options and forgiveness programs to help you find your best solution. By completing a free application, you can see the repayment plans you qualify for and which are most affordable, and explore your options for loan forgiveness. If you purchase an Essential account, Savi also provides individual one-on-one support at a steeply discounted rate for NASW members.

The goal is to take the stress out of managing your student loans. NASW member Gregory P. said, “With SAVI's help, I stopped worrying. I was being guided through the process by a knowledgeable team who would help me every step of the way. And every cent of the debt I had been carrying around for many years was forgiven. It is life-changing.”

After working with Savi, Gregory received almost $77,000 in loan forgiveness!  Another NASW member, Rodney W. says, “I genuinely feel more knowledgeable about my student loans and options; having SAVI available helps relieve some of the stress.”

Meanwhile, NASW Continues to Work for Policy Level Solutions 

While Savi and other student loan calculators provide practical help for individual borrowers, NASW continues to advocate for policy changes concerning student debt. NASW actively monitors opportunities to make progress, having achieved a significant victory in securing the Public Service Loan Forgiveness (PSLF) waiver. NASW participates in the PSLF coalition, maintains a close partnership with the Student Borrower Protection Center, and supports student loan debt relief through various avenues, including forgiveness, cancellation measures, employer-sponsored relief, and scholarships. Expanding PSLF eligibility to include social workers employed by nonprofits and for-profit organizations is a key objective. Through continuous monitoring, strategic partnerships, and active engagement, NASW remains committed to addressing student debt challenges and advocating for social workers' needs.

Learn how NASW advocates for and supports student debt relief efforts for social workers in all settings. 

And visit Savi to see how this service can help you navigate loan repayment and confirm whether you are eligible for student loan forgiveness.