Starting next month, the federal government will once again begin collecting payments and interest on outstanding federal student loans, after a three and a half year pause during which no payments were required.
As a result of the COVID-19 epidemic, the federal government declared in March of 2020 that student loan payments and interest accrual will be temporarily suspended.
Federal student loan amounts were effectively frozen for three years due to the halt, which was frequently prolonged.
When asked for comment, a Department of Education spokesman referred the Washington Examiner to its website for information on how to resume making payments on federal student loans.
Here’s the scoop on picking up where you left off with your federal student loan payments:
Ends of the Federal Student Loan Pause
According to the Office of Federal Student Aid of the United States Department of Education, the grace period for repaying federal student loans ends on September 1. Federal student loan borrowers will start to see interest added to their accounts once the grace period ends.
Although interest begins to accrue on September 1, borrowers are not required to make payments on their student loans under their repayment schedules until October.
The agency guarantees borrowers 21 days’ notice prior to the first payment due date for student loans. Auto-pay borrowers receive a 0.25% interest rate discount.
The Department of Education recommends re-registering for auto-pay if a borrower had it set up before a pause.
Modification on Income Driven Repayment Program
The Biden administration’s Department of Education modified the Income Driven Repayment Program, which allows debtors to pay based on their discretionary income (income above the poverty level).
Borrowers can now put down 5% of their discretionary income every month instead of 10%. Debtors who have paid on time for ten years may be qualified for loan forgiveness.