Student Loan Deferment comes to an End

In March 2020, during the pandemic, the government implemented a pause on student loan payments, both deferring the payment of student loans and halting the accrual of interest. It was projected by higher education expert Mark Kantrowitz that this pause on student loan payments saved the average borrower about $5000 in interest.

After a three-year reprieve, interest began accruing again on federal education debt as of September 1st, 2023. In October, millions of borrowers will make their first student loan payment since before the Covid-19 pandemic hit.

Although the federal forbearance was extended several times in the past, there’s no chance of another student loan pause extension due to a provision in the debt ceiling deal passed by Congress on June 2nd. While resuming the student loans is expected to create a hardship to many who suddenly will have new and potentially hefty bills beginning October 1st, people need to prepare for repayment.

On June 30th, 2023, the Supreme Court blocked President Joe Biden’s student debt cancellation plan, saying his administration lacked authorization under the Heroes Act to forgive up to $20,000 in student debt per borrower. Biden said he’d pursue other forgiveness options, but payments will become due in the meantime.

The interest-free payment pause, known as forbearance, began as an emergency pandemic measure in response to the Covid-19 pandemic in March 2020 under President Trump. Three years and nine extensions later, renewed student loan bills could come as a shock to some of the nearly 44 million borrowers with federal loans. And borrowers who left school in 2020 or later will need to gear up for their first-ever student loan payments.

When repayment begins in October, your previous loan balance will be listed, minus any loan cancellation you may have qualified for under surviving loan forgiveness or cancellation measures. Borrowers that are working toward loan forgiveness have some good news; all of the payments that you missed during the payment freeze count as qualifying payments toward loan forgiveness.


With repayment just around the corner, start thinking about how you’ll handle those payments and come up with a plan. Here are some steps you should take now to prepare for repayment:

Locate your student loan servicer. The company that manages your student loan may have changed since forbearance began.

Contact your servicer. Log in to your servicer’s website or give them a call. Update your contact information. Ask how much you might owe when payments resume, how much your monthly bills could be and what payment plans are available to you. Sign up for automatic payments to try and qualify for a 0.25 percentage point interest rate discount.

Consider an income-driven repayment plan. Your servicer can help you sign up for an IDR plan, or you can apply online. These plans lower your monthly bills to a set portion of your discretionary income.

Take advantage of the Student Loan Buster. For home owners, ACB Mortgage Solutions has access to a suite of programs designed specifically to help borrowers who are about to be impacted by the return of their student loan payments. These programs are designed to consolidate your student loans, reduce monthly payments, improve your cash flow, and manage this financially challenging time.

Interested in exploring the Student Loan Buster? Schedule an appointment with ACB Mortgage Solutions to talk to a specialist today! 

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