Let's be honest. Most Americans with federal student loan debt haven't given it much thought in the past three-plus years. With no interest accumulating and no requirement to make payments, most borrowers haven't made any student loan payments, looked at a statement, or even logged into their student loan accounts.
With the three-and-a-half year pause on federal student loan interest and repayment set to end after August, there are a few things you can do to make sure you're prepared. Here are three of the most important.
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Find your loan servicer and get in touch
Do you know who your student loan servicer is now? Many borrowers don't realize that three major student loan servicers -- Navient, PHEAA (FedLoan Servicing), and Granite State -- stopped servicing student loans in 2021. For context, these three servicers managed about 16 million borrowers' federal student loans. Since this happened during the payment pause, many borrowers with loans serviced by these three have no idea they've been transferred to a new servicer.
While your first student loan payment after the pause ends won't officially be due until October, it's a smart idea to figure out who your loan servicer is.
There are two main ways to find out who your loan servicer is. You can log in to your dashboard on studentaid.gov and scroll down to the "My Loan Servicers" section or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
In a nutshell, it's important to know who your student loan servicer is and how to pay your loans before you must start making payments again. Plus, your servicer is your main point of contact for things such as income-driven repayment loan forgiveness and other federal student loan programs.
Enroll in the best repayment plan for you
Not only do many people not know who their loan servicer is anymore, but the reality is that many borrowers knew the student loan system a lot better a few years ago than they do today. Plus, it's fair to say that many borrowers' income and family situation may have changed significantly since the payment pause began in March 2020.
So, it can be a great idea to take a few minutes and make sure you're enrolled in the payment plan that works best for you. The standard repayment plan is a 10-year repayment plan, but most borrowers are better off enrolling in an income-driven repayment (IDR) plan. And that's especially true with the Biden Administration's SAVE (Saving on a Valuable Education) plan that is set to roll out later this year.
If you aren't familiar, the SAVE plan is the most generous income-driven plan to date, capping payments at 5% of the borrower's discretionary income for undergraduate loans (10% for graduate) and forgiving any remaining balance after 20 or 25 years in repayment. Borrowers who are already enrolled in the REPAYE plan – the most popular – will be automatically enrolled in SAVE, and borrowers who are not can apply for it. You can find out what repayment plan you're currently enrolled by logging in to your loan servicer's online portal, and if necessary, you can apply for the SAVE plan with the Department of Education's income-driven repayment application.
Get your PSLF paperwork in order
The Public Service Loan Forgiveness program erases the remaining balance on your federal student loans after 120 monthly payments while in qualifying public service employment.
If you work in qualifying employment, one of the key steps toward loan forgiveness is documenting your employment throughout the 10-year repayment period. And while you don't have to submit the form every year or every time you get a new job, it can be much easier than tracking down 10 years of employers.
Another fact that borrowers might not know is that the three-and-a-half-year repayment pause counts toward your 10-year requirement. So, if your paperwork isn't up to date, it can be a good idea to take some time and fill out a Public Service Loan Forgiveness employment certification form. You'll need a separate form for every employer you work for during the 10-year repayment period prior to becoming eligible for loan forgiveness.
Not an exhaustive list
These are three important things for all federal student loan borrowers to do, but there could be other important actions to take, depending on your situation. For example, certain high-income borrowers who have excellent credit might be able to lower their interest rates with a private student loan refinancing. If you're a recent graduate, or simply haven't ever done so, you might want to look into consolidating your federal student loans to simplify the repayment process.
The bottom line is that every situation is different, but exploring your loan servicer's online portal and making sure you're ready for repayment to resume is an excellent first step.
