Student loan payments to restart in October after 3-year COVID pause. Here's what to know

After three years, the pandemic-era freeze on student loan payments will end soon. Student loan interest will start accruing on September 1 and payments are starting in October.

That means tough decisions for many borrowers, especially those in already-difficult financial situations. "The repercussions of falling into delinquency can be pretty severe," Rodriguez said. "The federal government can administratively intercept tax refunds and garnish wages. And it can affect Social Security, retirement, and disability benefits. Does it make financial sense at that point? Probably not."Rodriguez says her organization always advises against deferment or forbearance except once a borrower has exhausted all other options.

"That doesn't mean people shouldn't look into it," Rodriguez said. "But they may not be successful at discharging their loans." "Though it is difficult to get your loans discharged through the bankruptcy process, an increasing number of borrowers are eligible to get their loans discharged that way," she said. "A lot of people write that off as 'there's no way,' it's impossible.' But it's increasingly possible."When you fall behind on a loan by 270 days - roughly 9 months - the loan appears on your credit report as being in default.

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