Student loan payments are about to restart. What you need to know ahead of receiving that first bill

Ready or not, student loan bills are restarting in a matter of weeks.

Most borrowers haven’t made a payment on their education debt since Donald Trump was president and the coronavirus was starting to spark concerns.

The pause on the bills and the accrual of interest has been in effect since March 2020. It was extended eight times, and has lasted 42 months.

On average, the relief saved borrowers around $15,000.

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But the pandemic-era policy will conclude in October, when borrowers can expect to receive their first bill. Here are three helpful things to know as your due date approaches.

Consumer advocates say many borrowers are likely to struggle readjusting to student loan payments.

“Even if the risk from the virus has diminished, the financial fallout has not,” Persis Yu, deputy executive director at the Student Borrower Protection Center, previously told CNBC.

The Consumer Financial Protection Bureau has also warned that roughly 1 in 5 student loan borrowers have risk factors that could lead them to face difficulties meeting their bills.

To combat these concerns, the Biden administration is implementing a 12-month “on ramp” to repayment, during which borrowers will be shielded from the worst consequences of falling behind.

Specifically, for a year, borrowers’ late payments shouldn’t be reported to the credit bureaus and they will not face the normal collection activity, including wage and retirement benefit garnishments, said higher education expert Mark Kantrowitz.

Several of the lenders that manage federal student loans for the government — including Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State — stopped doing so during the pandemic-era pause.

As many as 4 in 10 student loan borrowers will be transferred to a different company by the fall, according to the CFPB.

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Those who were serviced by Granite State will now be with EdFinancial Services, said Kantrowitz, who has been tracking the changes. Accounts with Great Lakes Higher Education should be managed by Nelnet going forward, and Navient’s borrowers will be moved to Maximus Federal Services/Aidvantage.

Borrowers can check to see if they have a new servicer at StudentAid.gov.

Meanwhile, borrowers shouldn’t have to do much during the servicer swap, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Some will need to create an updated online account with their new company. “But the communications they received would have told them if they needed to take that step,” he added.

If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.

You’ll also want to make sure your new servicer has your latest contact information, he said, as these details might have changed during the Covid pandemic.

If you are enrolled in the same repayment plan as you were before the pause went into effect, your monthly bill may not change, Kantrowitz said. The average payment is about $350 a month.

However, if you are signed up for an income-driven repayment plan, your monthly bill could be different if your income is lower or higher than it was in March 2020. IDR plans cap your payment at a share of your discretionary earnings.

Also: if you signed up for the Biden administration’s new SAVE plan, your monthly payment should be lower, at least in time. That plan cuts people’s obligation to just 5% of discretionary income, the smallest amount to date. (Some of the program’s benefits will be in effect by the time payments restart, but others will only kick in next summer, due to the timeline of regulatory changes.)

To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org