Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.
The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance of federal student loans. As a result, student loan interest accrual resumed on Sept. 1, 2023, and payments in October 2023.
Although the pandemic-related pause that began in March 2020 is no longer in effect, the Biden administration has implemented a temporary “on-ramp” protection. Any federal student loan borrower who received the Covid-19 forbearance relief will be eligible for the 12-month on-ramp protection automatically. This means you’ll be protected from having your federal student loans reported as delinquent if you fail to make any required loan payments from October 2023 through September 2024.
Below we highlight how the on-ramp protection works and how federal student loan borrowers may also benefit from the Saving on a Valuable Education (SAVE) Plan.
What Is a Student Loan Forbearance Extension?
Congress authorized the initial Covid-19 student loan forbearance in March 2020 when it passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act suspended federal student loan payments and federal student loan interest accrual through September 30, 2020.
Two presidential administrations — starting with the Trump administration — extended the Covid-19 forbearance through executive action. The Biden administration issued several extensions to the Covid-19 forbearance up until the 2023 debt ceiling bill ended the practice.
Federal student loan borrowers facing financial difficulties may request a general forbearance, and some borrowers may qualify for a mandatory forbearance. A general or mandatory forbearance can temporarily suspend making loan payments during an approved period.
Federal student loan forbearances typically have 12-month durations, but you can request an extension if you meet the requirements. The cumulative limit on a general forbearance is three years.
Recommended: What Is Student Loan Forbearance?
Will Student Loan Forbearance Be Extended?
The passage of the 2023 debt ceiling bill guarantees the Covid-19 forbearance will not be extended. Federal student loan interest accrual resumed Sept. 1, 2023, and borrowers are now expected to make required payments when due.
So the Covid-19 student loan forbearance will not be extended, and the Biden administration’s one-time student loan forgiveness plan under the HEROES Act will not take effect. The Supreme Court rejected Biden’s broad debt relief plan in June 2023, finding the HEROES Act did not authorize the program.
Although the Covid-19 forbearance will not be extended under the HEROES Act, the Biden administration has implemented temporary “on-ramp” protections.
If you’re covered by the on-ramp, you’re protected from having your federal student loans reported as delinquent or placed in default from October 2023 through September 2024. But federal student loan interest will still accrue during the on-ramp, so failing to pay may increase your student debt burden.
💡 Quick Tip: Ready to refinance your student loan? You could save thousands.
How to Extend or Pause Student Loan Payments in General
If you’re concerned about your ability to resume student loan payments beyond the temporary on-ramp protection, consider talking to your student loan servicer about:
• General student loan forbearance
• General student loan deferment
• An income-driven repayment plan
• Public Service Loan Forgiveness program
Income-Driven Repayment (IDR)
Based on your income and family size, an IDR plan can set your student loan payments at an affordable repayment amount per month for you. There are four plans, which last for a certain number of years and forgive any remaining balance after that:
• Saving on a Valuable Education (SAVE) Plan
• Income-Based Repayment Plan
• Income-Contingent Repayment Plan
The SAVE Plan replaced the former REPAYE Plan in July 2023. If you were enrolled in the REPAYE Plan at that time, you’ve been automatically enrolled in the SAVE Plan.
The SAVE Plan can give you a $0 monthly payment if your income is within 225% of the federal poverty guideline (or less than $32,805 for a single borrower and $67,500 for a family of four in 2023).
Another benefit to the SAVE Plan is that your loan balance won’t grow over time if your monthly payment amount is less than the interest accruing.
Refinancing
It’s possible to consolidate both federal and private student loans into one new loan when you refinance your student loans with a private lender. If an applicant qualifies for a lower interest rate and a shorter term, it could reduce the amount of money paid in interest over the life of the loan. You may pay more interest over the life of the loan if you refinance with an extended term.
💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.
Alternative Student Loan Financing Options
As you’re thinking about college funding, keep this in mind: You can choose from a number of college financing options, including scholarships, grants, and private student loans:
• Scholarships. Scholarships are awarded based on merit or need, and students do not need to repay them. Students can get scholarships through businesses, colleges, and other organizations. There are online scholarship search tools that can help you find opportunities you might be eligible for.
• Direct PLUS Loans. Direct PLUS Loans can help graduate or professional students pay for college. They can also help parents of dependent undergraduate students pay for their child’s college education. You might want to consider a parent PLUS loan refi to a lower rate if you’re repaying a PLUS loan.
• Grants. Students can get grants from states, the federal government, a public body, and/or other organizations to pay for college.
• Private student loans. Private student loans are given by commercial lenders, not the U.S. Department of Education. Unlike most federal student loans, you will undergo a credit check and possibly have to get a cosigner to sign on the loan with you.
The Takeaway
The Covid-19 forbearance is no longer in effect and won’t be extended under the HEROES Act. This means federal student loan borrowers are generally expected to make required loan payments when due. (A temporary on-ramp protection from October 2023 through September 2024 may protect you from typical delinquency impacts, but it won’t stop your interest from accruing.)
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
How do I know when my student loan payments will resume?
Federal student loan payments resumed in October 2023. You may receive billing statements from your federal loan servicer going forward.
What does student loan forbearance mean?
Forbearance means a borrower can temporarily suspend making loan payments during an approved period. There are two main types of forbearance for federal student loans: general and mandatory. This does not include the former Covid-19 forbearance, which ended as required under the bipartisan Fiscal Responsibility Act of 2023.
What are income-driven repayment plans?
An alternative to forbearance, income-driven repayment plans can set your monthly loan payments at an affordable amount for you. There are four plans. Each lasts a certain number of years and forgives any remaining balance after that. Beginning in July 2024, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments under the SAVE Plan.
Photo credit: iStock/Andrea Migliarini
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SoFi Private Student Loans
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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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