navigating the new landscape of student loan repayment

Recent changes to student loans explained.

October 4, 2023

You may be wondering what is going on with student loans, especially if you are a federal student loan holder. Student loans have undergone many changes over the last few years. For many, student loans can be a significant financial burden, affecting not only the individual’s financial well-being but also their overall quality of life. We’ve outlined some of the changes you need to know and the steps to take to benefit from these adjustments. 

A brief overview of recent student loan changes 

First, let’s look at the timeline of recent student loan changes: 

• March 2020 - Forbearance (a temporary pause) on student loans is enacted by the federal government in response to financial hardships caused by the coronavirus pandemic.
• April 2022 - The Education Department announces an Income-Driven Repayment (IDR) plan and Public Service Loan Forgiveness (PSLF).
• October 2022 - Congress passes the Joint Consolidation Loan Separation Act.
• July 2023 - The Education Department announces the first major wave of loan forgiveness is coming for over 804,000 borrowers.
• July 2023 - Parts of the IDR plan go into effect.
• September 2023 - Interest on student loans starts accruing again.
• October 2023 - Student loan payments resume.
• July 2024 - The rest of the IDR plan goes into effect. 

Forbearance ended on Oct. 1, 2023

After more than three years of student loan pauses, payments resumed this October, while the interest began accruing again on Sept. 1. 

PSLF account adjustment, or waiver

This summer, the Education Department announced that loan forgiveness is coming for over 804,000 borrowers who’ve been paying off their student loans for at least 20 years. 

If you’ve been steadily paying off a student loan for at least 20 or 25 years (including forbearance) you’ll be student debt-free after the adjustment. If you borrowed less than $12,000, you’ll be free of that debt burden, even if you’ve only been paying off your student loan for 10 years. 

Steps to take: The adjustment is mostly automatic. However, if you have a commercially held loan, you must apply to consolidate them at StudentAid.gov by the end of 2023 to enjoy the full benefits of this adjustment. 

A new IDR plan

The existing income-driven REPAYE plan is being replaced by a new, broader plan called Saving on A Valuable Education, or SAVE. SAVE is expected to halve the monthly payments for many.

Steps to take: Borrowers could sign up for this new plan before forbearance ended this fall. However, the full plan will not take effect until July 2024. If you are already enrolled in the REPAYE plan, your loan will automatically be moved into the SAVE plan in October.

Also, if you qualify for the PSLF waiver, but you’ll have a balance remaining after the adjustment, you’ll need to sign up for an IDR plan when payments resume to keep building credit toward loan forgiveness. 

Student loan servicer switches

In April 2023, the Education Department signed contracts with five federal student loan servicers, which are expected to go live in 2024. If the Department transfers your loans to another servicer, your current and new servicers will notify you about the change.

Steps to take: Make sure your contact information is current with your servicer. 

It’s essential for individuals to stay informed about these changes, as they can impact their financial future. While the credit union does not offer student loan options, we can assist you with concerns you may have in managing your monthly expenses. Our team can discuss options that may save you money on debts such as credit cards, auto loans, and mortgages. With the right strategy, managing your debt can be a less stressful part of your financial journey.