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Federal Student loan Interest Accrual Resumed September 1, 2023, After a Three-Year Pause.
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millions of Americans with federal student loans began accruing interest on September 1, 2023, and payments resumed in October 2023, ending a more than three-year pause initiated during the COVID-19 pandemic.
Background on the Payment Pause and Interest Waiver
The payment pause and interest waiver were initially authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020. The Department of Education extended the pause multiple times through executive action. The Biden-Harris Administration announced the final extension in August 2022, stating it would be the last, and implemented a “fresh start” plan to help borrowers transition back into repayment.
Details of Interest Accrual and Repayment
Interest began accruing on all federal student loans – including Direct Loans, Federal Family Education loans (FFEL), and Perkins Loans – starting September 1, 2023. Payments were due starting in October 2023. The Department of Education implemented a 12-month “on-ramp” period,from October 1,2023,to September 30,2024,during which borrowers who miss payments will not be reported as delinquent to credit bureaus.
Impact and Borrower Resources
According to the Education Data Initiative, as of November 2023, total federal student loan debt held by Americans exceeded $1.75 trillion. The resumption of payments and interest accrual impacts over 43 million borrowers. The Department of Education offers several resources for borrowers, including:
- SAVE Plan: A new income-driven repayment plan designed to lower monthly payments, possibly to $0 for some borrowers. https://studentaid.gov/manage-loans/repayment-plans/saving-on-a-new-plan
- StudentAid.gov: The official website for federal student aid, providing facts on loan types, repayment options, and loan forgiveness programs. https://studentaid.gov/
- Loan Simulator: A tool to estimate monthly payments under different repayment plans. https://studentaid.gov/loan-simulator
Borrowers experiencing financial hardship are encouraged to explore income-driven repayment plans and other available assistance programs to avoid default.