Start Planning for Repayment and Explore Available Options | Student Loan Repayment Guide

As the end of forbearance approaches, it’s essential to prepare for student loan repayment. Learn how to make payments, locate your loan servicer, contact them, consider income-driven repayment plans, and explore relief options.

Questions Answered in this Article

1. Q: How should I prepare for student loan repayment? A: Start by practicing making payments during the remaining months of forbearance and allocate the equivalent amount towards increasing your emergency fund or paying off other liabilities.
2. Q: How can I locate my student loan servicer? A: Log into StudentAid.gov and access your account details to identify your current loan servicer.
3. Q: What should I do once I have determined my loan servicer? A: Log in to their website or call them to update your contact information and inquire about the amount you may owe, expected monthly bills, available payment plans, and reinstate automatic payments if previously set up.
4. Q: What is an Income-Driven Repayment (IDR) plan? A: An IDR plan adjusts your monthly payments based on a percentage of your disposable income, potentially reducing your payments to as low as $0. Consult with your loan servicer to explore enrolling in an IDR plan.
5. Q: How can I find my loan servicer and reconnect with them? A: Sign into your Federal Student Aid account using your FSA ID to determine your loan servicer. Alternatively, contact the Federal Student Aid Information Center (FSAIC) at 800-433-3243 or visit the Department of Education’s “Who is my loan servicer?” site for additional assistance.

^{More: Understanding Biden’s Efforts to Alleviate Student Loan Debt in the US}

Start Planning for Repayment and Explore Available Options

As the end of forbearance approaches, it’s crucial to start preparing for student loan repayment. Regardless of how you managed the last few months of forbearance, taking proactive steps now will ensure a smooth transition into repayment and improve your overall financial health.

1. Practice Making Payments: Kristen Ahlenius, director of education at Your Money Line, advises practicing making loan payments even during the remaining months of forbearance. Allocate the equivalent amount of your expected monthly payments towards increasing your emergency fund or paying off other liabilities. By doing so, you’ll be financially prepared in case student loan forgiveness does not materialize while simultaneously strengthening your financial well-being.
2. Locate Your Student Loan Servicer: Since the initiation of forbearance, there may have been changes to the company managing your student loans. To identify your current loan servicer, log into StudentAid.gov and access your account details.
3. Contact Your Servicer: Once you have determined your loan servicer, log in to their website or call them. Update your contact information to ensure effective communication. Inquire about the amount you may owe when payments resume, the expected monthly bills, and the available payment plans. If you had automatic payments set up before forbearance, reinstate them. Scott Buchanan, executive director of the Student Loan Servicing Alliance, advises avoiding customer service delays when payments resume.
4. Consider an Income-Driven Repayment (IDR) Plan: Consult with your loan servicer to explore enrolling in an IDR plan. These plans adjust your monthly payments based on a percentage of your disposable income, potentially reducing your monthly payments to as low as $0. Completing the necessary paperwork will ensure you are prepared to enter an IDR plan when forbearance ends.
5. Explore Additional Relief Options: Watch for a revised IDR plan to launch later this year, which is expected to offer even more favorable terms. If your loans defaulted before the forbearance period began, consider enrolling in the temporary Fresh Start program to reinstate them and return them to good standing.

^{More: Supreme Court Ruling and Resuming Student Loan Payments: What Law Students Need to Know for September}

^{Learn More: Navigating Student Loan Repayment: Challenges and Strategies for Borrowers as Payments Resume}

How to Find Your Loan Servicer and Connect with Them

After a pause of over three years, student loan payments are set to resume in October. Due to a provision in the debt ceiling compromise, the forbearance initiated at the pandemic’s beginning cannot be extended again without congressional action. Consequently, it is crucial to reconnect with your student loan servicer now to ensure a smooth transition.

When contacting your loan servicer, it is essential to have information about your loan readily available, including account numbers and balances. However, be prepared for long waiting times and increased website traffic, as the White House’s proposed debt forgiveness plan and the news of payment resumption have resulted in a surge in call volumes.

^{Read More: Department of Education Proposes New Regulations to Protect Students from Excessive Debt}

^{More: How to Manage Student Loan Payments During Economic Uncertainty: Tips for 2023 Grads}

Discovering Your Student Loan Servicer

While the federal government provides loans for education, it entrusts the management of payments to third-party for-profit companies known as loan servicers.

You can sign into your Federal Student Aid account using your FSA ID to determine your loan servicer. Once on the dashboard, you will find your servicer’s information and other loan details.

Alternatively, contact the Federal Student Aid Information Center (FSAIC) at 800-433-3243 or visit the Department of Education’s “Who is my loan servicer?” site for additional assistance.

^{More: Department of Education Announces Changes to Income-Driven Repayment Forgiveness Criteria}

Potential Changes in Loan Servicers

In June 2020, then-Education Secretary Betsy DeVos implemented significant changes to the companies overseeing active and defaulted student loans for the federal government. As a result, the number of third-party contractors was significantly reduced.

Navient, which ceased its involvement in the federal student loan business in September 2021, transferred approximately 6 million accounts to Aidvantage. Additionally, FedLoans and Granite State concluded their contracts with the government in December 2021, with funds being transferred to MOHELA and EdFinancial, respectively.

As of June 2023, Nelnet has taken over managing student loans previously handled by Great Lakes, which no longer manages federal student loans. Nelnet and Great Lakes share the same parent company.

In the event of a servicer change, you should have received a letter or email notifying you, and your account information should have been transferred automatically without any changes to the loan terms.

^{More: Student Loan Forbearance Extension: What You Need to Know}

Contacting Your Student Loan Servicer

Five companies manage most federal student loans, with Nelnet being the largest among them. When reconnecting with your loan servicer, ensure they have your current address and banking information. You may need to reestablish automatic payments if you had them previously.

Here are some essential inquiries to make when contacting your loan servicer:

1. Confirm your monthly payment amount to avoid surprises in October.
2. If your circumstances have changed, such as new expenses or a lower-paying job, consider exploring income-driven repayment (IDR) plans. While these plans may extend the repayment period, they offer more manageable monthly payments, reducing the likelihood of missing or defaulting.

^{More: How Income-Driven Repayment Plans Can Help You Manage Your Student Loan Payments}

^{Learn More: Revised Income-Driven Repayment Plan for Undergraduates: The Most Generous Plan Yet}

By taking these proactive steps before student loan payments resume, you can prepare yourself for a smooth transition into repayment. Practicing making payments, staying informed about your loan servicer, considering IDR plans, and exploring relief options will help you confidently navigate the repayment process and improve your overall financial well-being. Reconnecting with your loan servicer is crucial. You can confidently navigate the post-pause period by familiarizing yourself with your servicer’s information, addressing any service changes, and contacting your loan servicer to discuss payment details and potential repayment options.

^{More: Revised REPAYE Plan to Ease Student Loan Debt Burden}

Summary

• As the end of forbearance approaches, it’s important to start preparing for student loan repayment.
• Practice making loan payments during the remaining months of forbearance to be financially prepared.
• Locate your student loan servicer by logging into StudentAid.gov and access your account details.
• Contact your loan servicer to update your contact information and inquire about repayment details.
• Consider enrolling in an Income-Driven Repayment (IDR) plan to adjust your monthly payments based on your income.
• Watch for a revised IDR plan with more favorable terms launching later this year.
• Explore additional relief options, such as the temporary Fresh Start program for defaulted loans.
• Reconnect with your loan servicer to ensure a smooth transition into repayment.
• Be prepared for potential changes in loan servicers due to recent transitions in the industry.
• Confirm your monthly payment amount and consider IDR plans if your circumstances have changed.
• You can confidently navigate the repayment process and improve your financial well-being by taking proactive steps.

Definition of Terms

1. Forbearance: A temporary pause or reduction in student loan payments granted by the loan servicer. During forbearance, interest may continue to accrue.
2. Loan Servicer: A company or organization responsible for managing and servicing student loans on the lender’s or government’s behalf. They handle tasks such as collecting payments, providing customer service, and managing repayment options.
3. Income-Driven Repayment (IDR) Plan: A repayment plan for federal student loans that adjusts the monthly payment amount based on the borrower’s income and family size. IDR plans can help make loan payments more affordable by capping the payment amount at a percentage of the borrower’s discretionary income.
4. Automatic Payments: An arrangement where the borrower authorizes their loan servicer to deduct the monthly loan payment from their bank account automatically. This helps ensure timely payments and may qualify the borrower for interest rate reductions.
5. Loan Default occurs when a borrower fails to make payments on their student loan for a certain period, usually 270 days or more. Defaulting on a loan has serious consequences, can negatively impact credit scores, and result in wage garnishment or legal action.
6. Federal Student Aid (FSA): A division of the U.S. Department of Education that oversees federal student aid programs, including grants, work-study, and loans. FSA provides financial assistance to eligible students pursuing higher education.
7. Debt Forgiveness: A program or policy that cancels all or a portion of a borrower’s remaining student loan balance under specific qualifying criteria. Debt forgiveness can relieve borrowers of their repayment obligations, reducing the overall burden of student loan debt.
8. Fresh Start Program: A temporary program that allows borrowers with defaulted loans to return their loans to good standing by making a series of on-time payments. The Fresh Start program helps borrowers rehabilitate their loans and regain eligibility for repayment options and benefits.
9. Department of Education: A federal government agency responsible for formulating policies and administering educational programs in the United States. The Department of Education oversees federal student loans and provides resources and information to borrowers.
10. Repayment Options: Various plans and options are available to borrowers for repaying their student loans. These options include standard repayment, extended repayment, graduated repayment, income-driven repayment, and others, each with different terms and payment structures.