Federal student loan payments resume: Here's what you need to know

Federal student loan payments are back on after a three-year pause and some borrowers are worried about making those payments.

Teja Yendapaloy, a University of Miami graduate student, is one of them.

“The first year of undergraduate was 70K a year or so on loans,” he said. 

When asked if he is ready to start making those payments,” Yendapaloy told NBC6. “I got to start making them at some point, but no, I'm not ready to be honest. It’s kind of like we're all, we all just have our head just above water.”

The SAVE Plan

In response to similar concerns, the Department of Education has implemented the SAVE Plan, an income-driven repayment plan designed to ease the burden on borrowers.

“If you make less than about $15 an hour or more, if you have a family to support, you don't have to pay anything. And that's because we think student loans shouldn't come before necessities like rent and food,” said James Kvaal, the Under Secretary of Education. 

Jacob Channel, a Student Loan Repayment Expert at LendingTree, adds, “In a nutshell, not only is this plan supposed to be easier for people to qualify for, it's supposed to be easier to do things like fill out the applications for it.”

The Department of Education says this plan can also “significantly decrease your monthly payment amount,” compared to other income-driven repayment plans. If you are enrolled in the REPAYE Plan or recently applied, you will be automatically enrolled in this plan.  

The following loans are eligible for the plan:

•           Direct Subsidized Loans,

•           Direct Unsubsidized Loans,

•           Direct PLUS Loans made to graduate or professional students, and

•           Direct Consolidation Loans that did not repay any PLUS loans made to parents.

For more information on this plan, you can click here: https://studentaid.gov/announcements-events/save-plan

What If You Miss a Payment?

If you miss a payment, don’t panic. The Department of Education has also set a 12-month “On-Ramp” program. Under it, borrowers won’t be reported to credit agencies or referred to debt collection agencies for a year. 

“Interest will still be accruing. But there's, you know, not really that hard and fast deadline in the same way that we might have seen prior to the pandemic because of this on ramp,” said Rachel Rotunda, Director of Government Relations at the National Association of Student Financial Aid Administrators. 

Last-Minute Tips

If you find yourself scrambling at the last minute, remember to:

•           Log into your student aid account.

•           Contact the company managing your loan.

•           At this point, you should know how much you owe and what your monthly payments will be.