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Prepare to Pay Your Student Loans Again: The Moratorium Is Nearly Over

The student loan moratorium has been extended multiple times under both the Trump and Biden administrations. That means borrowers haven't had to make student loan payments since March 2020. However, the yearslong payment holiday is set to end this summer.

If you've never made student loan payments or are not sure what to expect after the moratorium ends, here are a few items to keep in mind.

Couple reviewing billing statements at home.

Image source: Getty Images.

Student loan repayments could restart in August

The Biden administration previously announced plans to resume student loan payments 60 days after June 30, possibly earlier if the U.S. Supreme Court made a decision on Biden's student loan relief plan before then.

The debt ceiling deal doesn't change much about that timeline. Under the deal, all federal student loan borrowers will be expected to resume payments by the end of August.

Loan details will be available before payment due date

The U.S. Department of Education offers a database for all federal student aid information so you won't be left in the dark. Here's some information you'll be able to get your hands on before your payment is due:

  • Repayment plan options
  • Timeline to make your first payment
  • How to make payments

The government's student aid website noted that your payment won't be due as soon as the payment freeze ends. You'll receive payment details, such as the amount and due date, at least 21 days before your payment deadline.

Different repayment options are available

Paying student loan payments after a three-year hiatus may be a challenge if you haven't factored this into your budget. Fortunately, you don't have to worry about a one-size-fits-all payment plan. You can choose a repayment option that works best for you.

You may be familiar with the standard repayment plan, which includes fixed payments for up to 10 years. You could pay off your debt faster and save on interest payments during the life of your loan. But there's a potential drawback to consider: larger monthly payments than other federal loan options.

If you can't afford to put a larger chunk of your paycheck toward student loan payments, you can see if you qualify for other repayment options such as:

  • Graduated repayment plan: These plans are up to 10 years like the standard repayment option, but the payments aren't fixed. Your payments will start off low and increase every two years. This payment structure may be ideal if you expect your income to increase over time.
  • Revised Pay As You Earn Repayment (REPAYE): Your monthly payment won't be more than 10% of your discretionary income for 20 or 25 years. After that, your remaining student loan balance would be wiped away.
  • Pay As You Earn Repayment (PAYE): If you have a newer federal loan, you may qualify for this repayment option. Your monthly payments would be capped at 10% of your discretionary income. Whatever the payment amount ends up being, it must be less than what you would pay under the standard repayment plan. After 20 years, your remaining loan balance would be forgiven.

Before moving forward with a repayment plan, it's a good idea to look at the repayment qualifications and read all the payment details.

Don't let your summer go to waste

Thinking about student loan payments may be the last thing on your mind this summer. But if you plan ahead, you could end up saving yourself a lot of money and stress down the line. The more planning you do now, the faster you can scratch student loans off your to-do list and start crushing your other financial goals.

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