Federal student loan repayment resumes in the coming months — interest begins accruing in September, with payments starting in October — after a 3½-year payment pause. According to a new NerdWallet survey, most federal student loan borrowers didn’t make payments during the pandemic forbearance. If you’re one of these borrowers, here are five steps to prepare for repayment.
2. Decide on a payment plan The standard repayment plan is 10 years, and if you can afford the payments, this is probably the best choice to minimize interest costs. However, there are other repayment plans that can lower your monthly amount owed. The survey found that 60% of federal student loan borrowers don’t know what options they have for payment programs.
If there aren’t extras to be cut, even after lowering your payment through an income-driven repayment plan, you might choose to not make payments for up to a year. The Biden administration has instituted a 12-month onramp period, meaning you won’t be penalized for not making payments. But there are drawbacks to taking this route.
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