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Department of Education (3)

Federal Student Aid (FSA) (2)
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Student loans (5)

In late summer and early-fall 2023, the U.S. Office of Federal Student Aid (FSA) updated information for the public on the return to student loan repayments. The most noteworthy websites are Prepare for Student Loan Payments To Restart and COVID-19 Emergency Relief and Federal Student Aid.

FSA points out that for defaulted loans, “collections (offset and garnishment) on most defaulted loans will not resume until at least September 2024 due to the Fresh Start program.”

FSA notes that during the on-ramp period

To help borrowers successfully return to repayment, we created a temporary on-ramp period through Sept. 30, 2024. This prevents the worst consequences of missed, late, or partial payments, including negative credit reporting for delinquent payments for twelve months.

However, payments are still due, and interest will continue to accrue (add up). We will not report you as delinquent during the on-ramp, but we do not control how credit scoring companies factor in missed or delayed payments.

Only loans that were eligible for the payment pause are eligible for the on-ramp.

To be eligible for the on-ramp, FSA notes the following:

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.

Generally, if you miss payments, your loan is considered delinquent and is reported as such to the national credit reporting agencies. You don’t get reported when you’re in forbearance. During the on-ramp period (through Sept. 30, 2024), we’ll automatically put your loan in a forbearance for the payments you missed.

Here’s what this means:

      • Your account will no longer 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 accrue. Your servicer will still provide you with billing statements showing you are delinquent on your payments. Not making a payment will result in you owing more on your student loans.

As interest builds up, your servicer may also be required to increase your monthly payment to ensure you pay off your loans on time. If so, your servicer will send you a notice of the changed monthly payment amount. (Note: On an IDR plan, your monthly payment will not go up if your payments do not cover interest).

Additionally, missed payments generally won’t count toward loan forgiveness under any income-driven repayment plan or Public Service Loan Forgiveness.

You should still make your payments if you can. If you can’t afford your payment, explore IDR plans, especially the SAVE Plan. Under the SAVE Plan, your monthly payment could be as low as $0.

Additional Resources

Student Loan Payments Are Due Again. Here Are 5 Things to Know, NY Times (Aug. 31, 2023)

Additional resources from VantageScore

Additional resources from FICO