The payment pause ended in October 2023
The federal student loan payment pause — a period when borrowers did not have to make monthly payments on most federal loans — ran from March 2020 through September 2023. During those three and a half years, interest did not accrue on Direct Loans, PLUS Loans, or Stafford Loans held by the Department of Education. Payments resumed on October 1, 2023, and interest began accruing again.
The pause was tied to the COVID-19 national emergency declaration. When that declaration ended in May 2023, the payment pause was set to end four months later. Borrowers who had federal loans during the pause period received notices from their loan servicers starting in summer 2023 about the restart date and what their new payment would be.
If you held federal student loans during the pause, your account was not automatically closed or transferred. Your servicer remained the same unless you had already requested a change. When payments restarted, your monthly payment amount depended on your loan type, balance, and repayment plan.
Key Takeaways
- The payment pause lasted from March 2020 to September 2023, during which no interest accrued on federal loans and no payments were required.
- When payments restarted in October 2023, interest began accruing again at the rate set for your loan type.
- Your monthly payment amount depends on your loan balance, interest rate, loan type, and which repayment plan you are on.
- Borrowers who were in default before the pause began were not automatically brought current; they had to take separate steps to restore their loans.
- Income-driven repayment plans allow you to base your payment on your current income rather than a standard 10-year schedule.
How your payment was calculated when the pause ended
Your loan servicer sent you a notice before October 2023 showing your new payment amount. That amount was based on your loan balance at the time the pause ended, your interest rate, and your repayment plan. If you were on the Standard Repayment Plan, your payment was calculated to pay off the loan in 10 years. If you were on an income-driven plan, your payment was based on your income and family size.
The interest rate on your loan did not change when the pause ended — it was set when you first borrowed. Federal undergraduate loans taken out after July 1, 2023, have a fixed rate of 8.5 percent. Graduate loans have a fixed rate of 7.5 percent. Parent PLUS loans have a fixed rate of 8.5 percent. Rates for loans taken out in earlier years vary; you can find your rate on your loan documents or by logging into your servicer's website.
If you had not made a payment in years, your first payment after the pause may have felt large. Many borrowers used the pause to pay down other debts or build savings. If you did not use that time to prepare, you could request to switch to an income-driven repayment plan, which typically lowers the monthly payment.
Income-driven repayment plans and payment amounts
Four income-driven repayment plans exist for federal student loans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR). On each plan, your monthly payment is calculated as a percentage of your discretionary income — your adjusted gross income minus 150 percent of the federal poverty line for your family size. The percentage varies by plan and ranges from 10 to 20 percent of discretionary income.
If your discretionary income is very low or zero, your payment on an income-driven plan may be $0 per month. You still must make the $0 payment each month to stay current on the loan. Interest continues to accrue even when your payment is $0, and unpaid interest may be capitalized (added to your principal balance) depending on which plan you are on.
To switch to an income-driven plan or to recalculate your payment based on a change in your income, you submit a form to your loan servicer. The form asks for your income, family size, and state of residence. You can submit it online through your servicer's website, by mail, or by phone. Your servicer will send you a new payment amount within 30 days.
What happened to borrowers who were in default
Borrowers whose loans were in default before the pause began were not automatically brought current when the pause ended. Default occurs after you have not made a payment for 270 days. During the pause, the clock on default did not move forward, but loans that were already in default stayed in default.
To restore a defaulted loan, you had to choose one of three paths: consolidate the loan into a Direct Consolidation Loan, rehabilitate the loan by making nine on-time payments over ten months, or enter into a repayment agreement with your servicer. Each path had different requirements and different effects on your credit report. Rehabilitation removed the default from your credit history after you completed the nine payments; consolidation and repayment agreements did not remove the default notation but allowed you to resume regular payments.
If you did not take action to restore a defaulted loan before or after the pause ended, your servicer could refer the debt to the U.S. Department of Education's offset program, which means your federal tax refund or Social Security payment could be intercepted to pay the debt.
Public Service Loan Forgiveness and the pause
The payment pause created a temporary expansion of Public Service Loan Forgiveness (PSLF). Normally, PSLF forgives the remaining balance on your federal loans after you make 120 on-time payments while working full-time for a government agency or nonprofit organization. During the pause, months in which you did not make a payment still counted toward the 120-payment requirement if you were employed in a may have access to job.
This temporary expansion ended when the payment pause ended in October 2023. Going forward, only months in which you actually made a payment count toward PSLF. However, if you had already received PSLF forgiveness during the expansion period, that forgiveness was permanent and was not reversed.
If you work in public service and want to track your progress toward PSLF, you can log into the Federal Student Aid website and view your payment count. You can also submit a PSLF form to your servicer to request a count of may have access to payments.
Loan servicer changes and account transfers
During the pause, the Department of Education changed which companies serviced federal student loans. Aidvantage, Mohela, and Nelnet became the main servicers. If your servicer changed, you received a notice before the transfer happened. Your loan balance, interest rate, and repayment plan moved with you to the new servicer — nothing was lost in the transfer.
If you had trouble locating your account after a servicer change, you could use the Federal Student Aid loan search tool at studentaid.gov. That tool shows all federal loans in your name and which servicer currently holds them. You can also call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
Some borrowers chose to consolidate their loans into a Direct Consolidation Loan during or after the pause. Consolidation combines multiple federal loans into one new loan with a single monthly payment. The interest rate on the new loan is the weighted average of the rates on the loans being consolidated, rounded up to the nearest one-eighth of one percent. Consolidation resets your payment count for PSLF purposes, so it is not recommended if you are close to the 120-payment threshold.
What to do if you cannot afford your payment
If your payment restarted in October 2023 and you cannot afford it, your first step is to contact your loan servicer. You can find your servicer's phone number on your loan statement or at studentaid.gov. Tell them about your income and ask about income-driven repayment plans. Switching plans can lower your payment significantly, sometimes to $0 per month.
If you are struggling with multiple debts, you might also consider loan consolidation, which extends the repayment period and lowers the monthly payment. Consolidation takes about 30 days to process. During that time, you are not required to make a payment on your federal loans, but interest continues to accrue.
Do not stop making payments without contacting your servicer first. If you miss a payment, your loan enters delinquency after 90 days and default after 270 days. Default can result in wage garnishment, tax refund offset, and damage to your credit score that lasts for years.
Frequently Asked Questions
Does the payment pause affect private student loans?
No. The pause only applied to federal student loans held by the Department of Education. Private loans from banks, credit unions, and other lenders were not affected. Private loan servicers did not pause payments or stop interest from accruing during this period.
Can I get a refund for payments I made during the pause?
No. Payments you made during the pause were applied to your loan balance as normal. The Department of Education did not refund payments made by borrowers who chose to pay during the pause period.
What happens if I miss a payment now that the pause has ended?
Your loan enters delinquency 90 days after a missed payment. After 270 days without payment, your loan goes into default. Default can trigger wage garnishment, tax refund offset, and a negative mark on your credit report that affects your ability to borrow money in the future.
Can I go back on the payment pause if I lose my job?
No. The payment pause was a temporary measure tied to the COVID-19 emergency declaration and has ended permanently. If you lose your job or experience a drop in income, you can switch to an income-driven repayment plan, which may lower your payment to $0 per month based on your current income.
Will my loans be forgiven if I stay on an income-driven plan long enough?
Yes. On income-driven repayment plans, any remaining balance is forgiven after 20 to 25 years of payments, depending on which plan you are on. However, the forgiven amount may be treated as taxable income in the year of forgiveness, which could result in a large tax bill.