Starting Oct. 1, millions of student loan borrowers like me were required to make their very first student debt payment. If you graduated college during the pandemic -- that is, after the federal payment pause began in March 2020 -- navigating the student loan repayment process can feel like decoding a different language.
I wish I had a translator.
We’ve all felt economic uncertainty and a bit of whiplash over the direction of student debt reform. The moratorium on student loan interest and payments was extended several times over the last three years, but those extensions are now over. The chance of getting partial forgiveness through the government’s student debt relief program was shot down by the Supreme Court.
That means it’s time for borrowers to develop a repayment plan. Before I tell you what steps I took to prepare, here are a few important tidbits to know.
What to know before making student loan payments for the first time
- Your first payment is due in October: Unless you graduated in the last six months and you’re still in your automatic grace period, your first payment is due in October. The exact date will depend on your loan provider.
- Interest started to accrue on current balances on Sept. 1, 2023: Interest rates on federal student loans were set to 0% in March 2020 during the payment pause, but regular interest rates already resumed on Sept. 1. The interest rates on federal student loans are fixed, meaning they won’t change during the life of the loan, but rates vary based on when the loan was disbursed. For example, the average rate for a direct federal student loan in the 2019-2020 academic year was about 4.53%, but today’s undergraduate students are seeing interest rates as high as 5.50%.
- Borrowers who miss monthly payments won’t be considered delinquent for the first 12 months: The US Department of Education issued a 12-month “on-ramp” to repayment program. So if you miss a monthly payment during this period, you won’t be considered delinquent, reported to the credit bureaus, placed in default or referred to a debt collection agency. However, this isn’t an extension to the payment pause.
- Monthly payments depend on the repayment plan you choose: If you don’t enroll in an Income-Driven Repayment, or IDR, plan, your monthly payment will be based on your servicer’s standard plan and not your income.
Step 1. Find your student loan servicer
The first thing to figure out is your student loan servicer, which will be automatically assigned to you by the Department of Education.
There are six federal student loan servicers: Aidvantage, Default Resolution Group, ECSI, Edfinancial, Mohela and Nelnet. To figure out your loan servicer, visit studentaid.gov and log in to your account with your FSA ID, email or phone number.
If you can’t remember your login, you’ll need to provide personal information such as your name, date of birth and Social Security number. Once you access your account, visit your account dashboard and scroll down to “My Loan Servicers,” or call the Federal Student Aid Information Center at 1-800-433-3243.
Step 2. Log in to your account via your loan servicer’s website
The next step is to log in to your account on your loan servicer’s site. Make sure your contact information is correct so you can receive updates regarding your loan and upcoming payments.
My student loans are with Edfinancial, which recently transitioned to a new loan servicing platform. This change in platform didn’t impact the terms of my loan, but I had to create a new username and password after logging in with my SSN and birth date.
What if my loans were transferred to a new loan servicer during the payment pause?
More than 40% of borrowers saw their student loan servicer change after payments went on pause three years ago, according to the Consumer Financial Protection Bureau. Several student loan companies transferred their portfolios to new servicers, which could lead to repayment complications for more than 14 million borrowers.
If you’ve received an email that your loan servicer has changed, make sure to create a login with your new servicer before payments resume. You’ll need to update your contact information, add payment information and reenroll in autopay (if you choose to do so).
| Previous loan servicer | New loan servicer |
| OSLA | Aidvantage |
| Great Lakes | Nelnet |
| PHEAA | Mohela, Edfinancial, Aidvantage or Nelnet |
| Granite | Edfinancial |
| Navient | Aidvantage |
Step 3. Establish your repayment plan
Now it’s time to think about your repayment plan. Your account summary lays out the terms of your loan, including your total current balance, number of loans (if you have more than one), interest rate, minimum payment balance and payment due date.
My account dashboard looks like this:
If you’re worried about the size of your loan and your monthly payment, income-driven repayment plans can lower your monthly payment based on your income and family size. For example, I have about $27,000 in student loan debt, and with an income-driven repayment plan, my monthly payment is just a little over $100.
The federal government offers four IDR plans with repayment periods of 20 or 25 years: Saving on a Valuable Education (SAVE), Pay as You Earn (PAYE), Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR). SAVE will set monthly payments to $0 for more than 1 million borrowers who meet the income criteria.
An IDR plan isn’t automatically applied to your student loans. You’ll have to submit an IDR application at studentaid.gov by entering your FSA ID and personal information, including your most recent federal income tax return and your spouse’s income (if you filed jointly). You can also temporarily self-report your income until March 2024 if you can’t submit your tax documentation right away.
Once you complete the application, you’ll see which repayment plan you qualify for. Select the plan you’d like and sign the application electronically. Your servicer will confirm the payment adjustment with you via email or mail within four weeks of processing your request. In my case, Edfinancial updated my bill to reflect my IDR plan in a matter of days and automatically calculated my monthly payment.
You must recertify for an income-driven repayment plan every year to avoid having your payments revert to the standard plan with a 10-year repayment period. Pay attention to when your loan servicer sends you alerts so you don’t miss the deadline to recertify your IDR plan.
What if I don’t qualify for an IDR plan?
You’ll qualify for an IDR plan if your federal student loan debt is higher than your discretionary income or makes up a large portion of your annual income. (Note: If you’re a parent who took out a Parent Plus loan on behalf of your child, you’re ineligible for an IDR plan.)
IDR plans are income-driven, so the more money you make, the higher your monthly payment will be. Each IDR plan has some component of forgiveness after 20 or 25 years.
However, you might reconsider your options if your monthly payment with an IDR ends up being higher than what it would be with a standard repayment plan. The standard repayment plan is based on balance and designed so that your debt is paid off in 10 years, or after 120 monthly payments.
Step 4. Prepare for your first payment
As you start to look at your monthly budget and student loan plan, prioritize taking care of your monthly minimum payment, and consider using autopay so you don’t miss any payments.
Then review what types of high-interest debt you owe. More than half of student loan borrowers have taken on credit card debt since the beginning of the pandemic, including myself.
For example, the interest rate on my student loan debt is almost 4.5%, but the annual percentage rate on my Capital One VentureOne Rewards Credit Card is over 20% (close to the average credit card interest rate). Before I make any additional payments toward my student loan bill, I’m going to make sure I can chip away at my credit card debt so that I don’t accrue more interest on my balance.
I’ve also had to reconsider how to meet my savings goals. With only a small financial cushion, I’m finding a way to balance paying off my student loans and credit card debt while taking advantage of the high yields on savings accounts so I can increase my earnings. One of the best pieces of advice I got from experts recently was to move my credit card debt to a balance transfer card, where I can take advantage of an introductory 0% interest rate for 21 months.
Balance transfer credit cards can help you pay down high-interest credit card debt without incurring interest on your balance for a period of time. But if you can’t pay your debt off before the introductory period ends, the remaining balance will accrue interest at the regular APR, which is generally much higher.
What if I can’t make payments when payments resume in October?
If you can’t make a payment within the first year, you’ll be given a pass: Delinquent payments won’t be reported to the credit bureaus until Sept. 30, 2024. But it’s important to note that even if you aren’t making payments, your balance will continue to grow because it will still accrue interest.
Skipping payments isn’t sustainable in the long term. I’m trying to get into the habit of paying my student loan bill on time so that my credit score won’t be affected down the line.
You could also call your student loan servicer to see if you qualify for deferment, which allows you to temporarily suspend payments based on economic hardship, or if you’re enrolled in an approved graduate fellowship program, on active military service or receiving cancer treatments, among other circumstances (see here for more details on deferment).
Student loan forbearance also allows you to stop making payments temporarily, but your loan will usually continue to accrue interest. You might qualify for forbearance if you experience financial difficulties, medical expenses or a sudden change in employment, and your loan servicer might be obligated to grant forbearance under specific circumstances (see here for more details on forbearance).
If you want to pursue deferment or forbearance, you’ll have to submit a request to your student loan servicer.
FAQs
You can find your interest rate by logging in to studentaid.gov and viewing the details of your loan under “View Details.” Or you can log in to your online account via your loan servicer’s website
Your minimum payment will vary depending on your repayment plan. An income-driven repayment plan sets your monthly payment based on your income and family size.
Under the SAVE Plan, if your monthly payment goes down to $0, you won’t be charged additional interest but your loan balance won’t go down.
You don’t have to begin repaying your federal student loans until you drop below full-time enrollment or leave school. You typically have a six-month grace period before you’re required to make payments on your student loans.
You might qualify for Public Service Loan Forgiveness, or PSLF, if you’re employed by the US government or a not-for-profit organization. To qualify, you have to be working full-time for an eligible employer (see the full list here) and have made 120 qualifying payments toward your direct student loans either under an IDR plan or the 10-year standard repayment plan. There are a handful of additional student loan forgiveness programs for teachers, borrowers with disabilities and those who served in the military or AmeriCorps.
