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Worried about when student loan repayments resume? These programs could help

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Borrowers with federal student loans haven't had to make payments or worry about accrued interest since March 2020. On top of that, millions of Americans thought their student loans would be eliminated through President Joe Biden's one-time student loan forgiveness program.

However, the Supreme Court struck down Biden's plan, ending the hopes of student loan debt relief for many. Congress also passed a law preventing any federal loan payment freeze extensions, so the payment pause will end in October.

The Biden administration acted quickly and announced new measures that could help borrowers struggling with their payments. Taking advantage of these programs could help you reduce your payments, get your loans in good standing, and avoid student loan default.

News for borrowers with federal student loans

When do student loans resume? It's a common question, and the answer has changed several times. Initially, the loan payment freeze on federal student loans was planned to last for only a few months. But then-President Trump — and later, President Biden — repeatedly extended the freeze. As a result, many borrowers haven't made payments toward their federal loans in over three years.

Now, payments are set to resume. According to the US Department of Education, interest will start to accrue on Sept. 1, 2023, and payments will begin in October 2023.

To make student loan repayment more manageable, the Biden administration launched three key initiatives:

12-month on-ramp to repayment for federal student loans

Typically, borrowers who fail to make on-time payments face steep consequences, including:

  • The negative activity is reported to the credit bureaus and noted on your credit history.

  • The account can be sent to collections.

  • If the loan enters default, the government can garnish your wages.

However, the government created a temporary "on-ramp" period. It gives borrowers 12 months to come up with a plan for managing their loans without worrying about missed or partial payments being reported to the credit bureaus or sent to collections agencies or the loans entering default.

Student loan interest will continue to accrue during this time, so paying the minimum required — or as much as you can afford — will help you avoid added interest charges. But the on-ramp period gives you time to adjust to student loan payments resuming without the severe consequences that usually come with late or missed payments.

Fresh Start program for borrowers in default

The Fresh Start program is a new initiative from the Biden administration for borrowers with student loan debt who were in default before the March 13, 2020, payment freeze. Under this program, the government is eliminating the negative impact of student loan default for those borrowers, allowing them to enter repayment like other borrowers so they can start their repayment with a fresh slate.

The Fresh Start program will last for one year after the end of the federal payment freeze, and it provides borrowers with the following benefits:

  • Restores access to income-driven repayment (IDR) plans

  • Reestablishes eligibility to federal student aid programs like Pell Grants

  • Protects borrowers from collections activity and negative credit reporting

  • Gives borrowers the option of qualifying for student loan rehabilitation if they default later on

The program is not automatic; to take advantage of the Fresh Start initiative, borrowers must take the following steps:

  • Reach out to the loan holder: Borrowers must contact their loan holder and state that they want to take advantage of the program. You can start by visiting or calling 1-800-621-3115.

  • The government removes your default status: After making arrangements, your loans will be transferred to a non-default loan servicer, and the US Department of Education will remove the default status from the borrower’s credit reports.

  • Sign up for a new payment plan: Once you're out of default, you can sign up for another payment plan. The majority of borrowers sign up for one of the income-driven repayment plans that base their payments on a percentage of their discretionary income and an extended repayment term.

Not all borrowers are eligible for the Fresh Start program. Only federal student loan borrowers with the following defaulted loan types will qualify:

  • Direct loans, including Federal Stafford loans, Direct Consolidation loans, and PLUS loans offered via the William D. Ford Direct Loan Program (TEACH Grants converted to Direct Unsubsidized Loans are also eligible).

  • Federal Family Education Loans (FFEL) loans, including Federal Stafford loans, Federal Consolidation loans, and Federal PLUS loans.

  • Federal Perkins loans held by the US Department of Education.

  • Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants, National SMART Grants, and TEACH Grants. (Note: you may have to repay part of a federal grant awarded to you.)

Other loans, including private student loans and privately held FFEL or Perkins loans, are ineligible. You can use the National Student Loan Data System (NSLDS) if you’ve defaulted on your student loan and are unsure of your loan type. If the loan or grant is not one of the program types listed above and is not assigned to the US Department of Education, the information on the NSLDS site does not apply to you.

The Fresh Start initiative is a one-time program; you cannot take advantage of it again. And if you default later, the government will report the date of your initial delinquency to the credit bureaus.

SAVE repayment plan

In 2023, the Biden administration announced the launch of a new IDR plan, the SAVE repayment plan. For low- to middle-income borrowers, the SAVE plan could significantly reduce their payments. It provides several benefits. Some won't go into effect until 2024, but these three perks will begin this summer:

It increases the amount of sheltered income

With all IDR plans, including the new SAVE plan, your payments are based on a percentage of your discretionary income. Currently, the other IDR plans define discretionary income as the difference between your actual income and 150% of the federal poverty guideline for your family size. But the SAVE plan adjusts the definition of discretionary income to the difference between your income and 225% of the federal poverty guideline.

For example, let's say you live in New York, are single, and earn $30,000 per year. The federal poverty guideline for a household of one is $14,580. The current IDR plans use 150% of the poverty guideline to determine your payments, so you would subtract $21,870 from your salary of $30,000 to find your discretionary income. In this scenario, your discretionary income is $8,130. Under the current IDR plans, payments cannot exceed 10% of your discretionary income, so your payments would total $813 per year or $67.75 per month.

Under the SAVE plan, discretionary income is defined as the difference between your salary and 225% of the federal poverty guideline. In this scenario, 225% of the federal poverty guideline for your family size is $32,805. Because your income is less than that, you have no discretionary income and would have $0 monthly payments. That means you won't have to pay anything toward your loans, but you won't enter default. And if you still have a balance at the end of your loan term, the remainder is forgiven.

The SAVE plan eliminates 100% of unpaid interest on subsidized and unsubsidized loans

As long as you make your payments on time, the government waives unpaid interest, so your loan balance won't grow over time. For example, if your loan accrues $50 per month in interest but your monthly payment is just $30, the government will waive the remaining $20.

Spousal income may be excluded

With some IDR plans, your spouse's income is included in the payment calculations, even if you file separate returns. But with SAVE, your spouse's income is excluded if you're married and file separately.

What to do to prepare for when student loan repayments resume

Payments are set to resume in October. To prepare, follow these steps:

Create a budget

If you haven't made payments toward your loans in years, your finances have likely changed quite a bit. Sit down and create a budget, outlining how much money you have coming in and going out every month. If your budget is too tight, look for areas where you can cut back or consider other repayment options for your student loans.

Find your student loan servicer

Your loans have likely changed loan servicers since 2020. And if the previous loan servicer didn't have your current address, you may not have received a notification. To find out where your loans are held — and to set up your payments to avoid late fees — you can sign in with the Federal Student Aid account dashboard or you can call the Federal Student Aid Information Center at 1-800-433-3243.

Once you know who your servicer is, you can create an online account or contact customer support to change repayment plans or set up your monthly payments.

Enroll in the Fresh Start program

If you plan on taking advantage of the Fresh Start program, contact your loan holder at or call 1-800-621-3115.

Enroll in a new repayment plan

On your loan servicer’s account dashboard, you can see what your minimum payment will be when payments resume in October 2023. If your payment under the current repayment plan is too high, you may be able to enroll in a new repayment plan, such as the new SAVE plan, to reduce your payments.

You can use the loan simulator tool to determine which plan gives you the lowest payments.

Apply for deferment or forbearance

If you are unable to make payments due to illness or unemployment, you may be able to postpone your payments under a federal forbearance or deferment program. Contact your loan servicer and explain your circumstances to find out what options are available.

Sign up for autopay

Signing up for automatic payments ensures you never miss a payment, but there is an added benefit: Federal loan servicers will also reduce your interest rate by 0.25%. Over time, that rate reduction can help you save money.

Make additional payments (if you can)

Not everyone will qualify for low monthly payments under an IDR plan. If you have to make payments under a standard 10-year repayment plan and want to get rid of your debt as quickly as possible, making extra payments is key.

For example, let's say you have $15,000 in student loans at 5% interest. With a 10-year repayment term, your monthly payment is $159 per month. If you increased your payments to $179 per month — adding an extra $20 to your monthly payments — you would pay off your loans 16 months early and save over $600.

Here is how much additional payments would affect your overall loan cost:


Will student loan payments resume?

Federal student loans will start accruing interest on Sept. 1, 2023, and your payments will resume in October 2023.

Are private student loans eligible for the new repayment plans or the Fresh Start program?

No, private student loans aren't eligible for the Fresh Start initiative, SAVE repayment plan, or other federal benefits. If you have trouble affording the payments on a private student loan, contact your lender to see if an alternative payment plan is available.

Will I be able to have my student loans forgiven?

Although the Supreme Court struck down President Biden's debt relief plan, federal loan borrowers may be eligible for other forms of loan forgiveness. For example, those who work for nonprofit organizations may qualify for Public Service Loan Forgiveness, and some teachers may qualify for Teacher Loan Forgiveness. You can view all loan forgiveness and discharge programs on

How do I apply for the new SAVE repayment plan?

The Save Plan doesn't have a separate application yet. However, borrowers can still take advantage of it. If you are currently on the Revised Pay As You Earn (REPAYE) plan, you will automatically be enrolled in SAVE. If you are on a different plan, you can sign up for REPAYE online, and you will be enrolled in SAVE.