How To Prepare for Successful Student Loan Payment:

Secondly, make sure to explore the various loan repayment options and select one that you qualify for and works best for your budget.

How To Pick the Right Repayment Plan:  

 

Saving on a Valuable Education (SAVE) Plan

The U.S. Department of Education has created the most affordable repayment plan in history – Saving on a Valuable Education (SAVE) plan. Borrowers signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in SAVE.

The SAVE Plan calculates your monthly payment amount based on your discretionary income and family size and offers the lowest monthly payments of any IDR plan.

Single borrowers earning $32,800 or less or a family of four earning $67,500 or less (amounts are higher in Alaska and Hawaii) will not owe loan payments. Borrowers earning more than these amounts will save at least $1,000 per year.

The plan eliminates 100% of remaining interest for both subsidized and unsubsidized loans after a scheduled payment is made under the SAVE Plan. After the monthly payment is made, loan balance will not grow due to unpaid interest.  For example: If $50 in interest accumulates each month and you have a $30 payment, the remaining $20 would not be charged.

Starting February 2024, the SAVE Plan will give borrowers who originally borrowed $12,000 or less loan forgiveness in as few as 10 years.

The following is one of many benefits that will be going into effect in Summer 2024. Borrowers on the SAVE Plan will have their payments on undergraduate loans reduced by half (decreased from 10% to 5% of income above 225% of the poverty line). Borrowers who have undergraduate and graduate loans will pay a weighted average of between 5% and 10% of their income based on the original principal balances of their loans taken to attend school.  

For more information on SAVE, how to apply, and new benefits starting in Summer 2024, visit SAVE Repayment Plan Offers Lower Monthly Loan Payments and watch the following video: Saving on a Valuable Education (SAVE) Plan - The New Income-Driven Repayment Plan.

Fresh Start

Fresh Start is a temporary program that offers assistance for borrowers who defaulted on their federal student loans. Fresh Start provides benefits, such as restoring access to federal student aid (loans and grants).

To leverage Fresh Start, contact your loan service provider. If your loans are held by the Department of Education, you can contact them via one of the below three methods. If a guaranty agency is your loan service provider, you will need to contact that agency (contact information for guaranty agencies).

To be considered for Fresh Start, you can do one of the following: 

1)   Online — Go to myeddebt.ed.gov and log in to your account. This is the easiest option if you know your login.

2)   Phone — Call 1-800-621-3115 (If you are deaf or hard of hearing, the TTY number is 1-877-825-9923).

• Tip: Before calling, look up your income on your most recent federal tax return (line 11 of IRS Form 1040).  If you cannot find your tax return or did not file taxes, you should still call.  

3)   Mail — Send a letter to P.O. Box 5609, Greenville, TX 75403. In your letter, include your name, social security number, date of birth, and the following: “I would like to use Fresh Start to bring my loans back into good standing.”

If you use Fresh Start to get out of default, here’s what will happen:

• The U.S. Department of Education (ED) will transfer your defaulted loans from the Default Resolution Group (or from a guaranty agency) to a loan servicer.
• The U.S. Department of Education (ED) will return your defaulted loans to “in repayment” status.
• The U.S. Department of Education (ED) will remove the record of your default from your credit report.

For more information about Fresh Start, visit A Fresh Start for Federal Student Loan Borrowers in Default | Federal Student Aid.

Student Loan Forgiveness 

Some situations may allow federal student loans to be forgiven, canceled, or discharged so that some or all the loan may not need to be paid back. Read below to learn about some of the more commonly used loan forgiveness programs. For a complete overview of ALL forgiveness program opportunities, visit Student Loan Forgiveness | Federal Student Aid.

Public Service Loan Forgiveness Program (PSLF)

This loan forgiveness program is available to people who work in public service in federal, state, tribal, local government, or non-profit organization. 

PSLF forgives the remaining balance on Direct Loans after 120 qualifying payments have been made while working full-time for a qualifying employer. Only payments made under certain repayment plans (primarily income-driven repayment plans) qualify for PSLF.

For more information, visit Public Service Loan Forgiveness (PSLF) Help Tool | Federal Student Aid. 

Teacher Loan Forgiveness 

Teachers that taught full time for five complete and consecutive academic years in a low-income school or educational service agency and meet other qualifications may be eligible for forgiveness of up to $17,500 on Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans.

Direct Consolidation Loan or a Federal Consolidation Loan may be eligible for forgiveness of the outstanding portion of the consolidation loan that repaid an eligible Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan.

For more information, visit Teacher Loan Forgiveness | Federal Student Aid.

Total and Permanent Disability Discharge

If you are totally and permanently disabled, you may qualify for a total and permanent disability discharge of your federal student loans and/or your Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.  For more information, visit Total and Permanent Disability Discharge | Federal Student Aid.

Avoiding Student Loan Scams

Unfortunately, potential student loan scams are on the rise. Be aware of student aid scams and use these tips below to avoid these scams.

Play It Safe: Protect Yourself from Student Loan Scams

Here is how you can spot a scam from a student loan debt relief company:

1. They ask for your FSA ID username and password.
2. They want you to pay up-front costs or monthly fees.
3. They promise instant and complete loan cancellation or loan forgiveness.
4. They ask for you to sign and submit a third-party authorization or power of attorney.
5. They want you to act right away and claim that their offer is limited.
6. Any messages from them have spelling and grammatical errors.

If you are still unsure that it is a scam, visit The Federal Trade Commission for more tips.

Frequently Asked Questions

I am currently enrolled in classes. Do I need to start making student loan payments?  If you are enrolled at least half-time, you do not need to start making payments as you have in-school deferment. If you graduate, stop attending classes or drop to less than half-time, you will need to start making student loan payments after your grace period ends. 

I do not know who my loan servicer is. How do I find out?  Visit and log in to studentaid.gov. Once logged in, update your personal information and you can view your student loan servicer. You will then want to log into the loan servicer’s website and create an account. 

How do I find out the amount of my monthly student loan payment?  You can log in to your loan servicer’s website and view your payment amount. 

Once the 0% interest rate ends, how do I find out what my interest rate will be?  Your interest rate will most likely be the same as it was before the 0% interest began.  However, the interest rate may change for some borrowers. Contact your loan servicer for your exact interest rate. You may also be able to log in to your loan servicer’s website to find this information.

I keep hearing about the on-ramp program. What is this program?  This year-long grace period (Oct. 1, 2023, through Sept. 30, 2024) prevents the worst consequences of missed, late, or partial payments, including negative credit reporting for delinquent payments.

How do I become eligible for the on-ramp program?  You do not need to request or enroll in the on-ramp period. If your loans were eligible for the payment pause, you are automatically eligible for the on-ramp.

Typically, if you miss payments, your loan is considered delinquent and is reported to the national credit reporting agencies. During the on-ramp period (available through Sept. 30, 2024), loans are placed in a forbearance for the payments you missed.

Here’s what this means:

• Your account will not be considered delinquent and will be made current.
• Your recent missed payments will not lead to negative credit reporting.
• Your loans will not default and therefore will not be sent to collection agencies.

Your payments are still due during the on-ramp period, and interest will continue to accumulate. Your servicer will still send billing statements that indicate you are delinquent on your payments. You will ultimately owe more on your students loans if you do not make payments.

As interest accumulates, your servicer may need to increase your monthly payment to ensure you pay off your loans on time. If so, your servicer will inform you. (Note: If you are on an IDR plan, your monthly payment will not increase if your payments do not cover interest).

Also, be aware that missed payments usually will not count toward loan forgiveness under any income-driven repayment plan or Public Service Loan Forgiveness.

My monthly student loan payment is too high. What are my options?  Visit studentaid.gov to review various repayment plan options—including income-driven repayment plans, which could substantially decrease monthly payments for qualifying borrowers.

The U.S. Department of Education has also created the most affordable repayment plan in history – Saving on a Valuable Education (SAVE) plan. Borrowers signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in SAVE.

For borrowers who still cannot make their payments, a temporary “on-ramp” period (available through September 30, 2024) will help borrowers avoid the penalties of missed, partial, or late payments. During that time, missed, partial, or late payments will not lead to negative credit reporting, default, or loans being sent to collection agencies. 

If you can make payments, you should as payments will be due, and interest will accrue during this on-ramp period. Also, be aware that missed payments usually will not count toward loan forgiveness under any income-driven repayment plan or Public Service Loan Forgiveness.

I am new to repaying student loans and have not made payments before. What do I do?  If you left school within the past 6 months, you will likely still be in your automatic grace period.  For most federal student loans, after you graduate, leave school, or drop below half-time enrollment, you have a six-month grace period (sometimes nine months for Perkins Loans) before you must begin making payments. Not all federal student loans have a grace period.

Your monthly payment amount will depend on the repayment plan you chose. If you don’t choose a plan, you’ll be put on the Standard Plan where payments are based on your balance size and not your income and family size.

You may want to consider applying for an income-driven repayment (IDR) plan that may be able to help decrease your monthly loan payments. 

My student loans are in default. What are my options?  The Fresh Start Initiative is now available for most borrowers and can help get loans back in good standing. Visit Fresh Start initiative to sign up and enroll in an affordable repayment plan with payments potentially as low as $0 a month.

I keep hearing about the Public Service Loan Forgiveness (PSLF) Program. What is this and do I qualify?The PSLF Program forgives the remaining balance on your Direct Loans after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan, and while working full-time for an eligible employer.

To qualify for PSLF, you must

• be employed by a U.S. federal, state, local, or tribal government or qualifying not-for-profit organization (federal service includes U.S. military service);
• work full-time for that agency or organization.
• have Direct Loans (or consolidate other federal student loans into a Direct Loan);
• repay your loans under an income-driven repayment plan or a 10-year Standard Repayment Plan; and
• make a total of 120 qualifying monthly payments that need not be consecutive.

I think I may have been contacted by a student loan scammer.  What should I do if I already gave my information or paid a student debt relief company?

• Contact your federal loan servicer to end any power of attorney or third-party authorization agreement. Also, make sure no unwanted changes were made on your loans.
• Contact your bank or credit card company, and request that payments to the debt relief company be discontinued.
• File a complaint with the Federal Trade Commission and Consumer Financial Protection Bureau.
• File a report of suspicious activity through Student Aid’s Feedback Center.
• Most importantly, log in to your FSA account and change your password.

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