What you need to know about student-loan repayment

Come October, some 40 million Americans will have to do something they haven’t done since the beginning of the pandemic: pay their federal student loans.

The resumption of payments will likely intensify the political debate about the education-debt load carried by many students, particularly from low-income households. As borrowers scramble to figure out what they owe, who they owe and whether they can pay, emotions are running high.

“This was a chance for reparations and rectifying the real and visceral impact of generations of wealth disparities,” said Kendall Taylor, who will graduate from Metropolitan State University of Denver this December with a bachelor’s degree in Art History and minor in Africana Studies. “I feel the forced repayment will act like an accelerant on a raging fire.”

To clarify the options of students and recent grads, RED spoke with Kerline Eglaus, a certified financial aid administrator and executive director of Financial Aid and Scholarships at MSU Denver.

“Take a deep breath,” she said. “There’s a lot going on.”

Why is loan deferment over?

In March 2020, the Trump administration temporarily suspended student-loan payments during the pandemic. As the spread of Covid slowed, the deferment program was set to end. In its place, the Biden administration proposed wiping away up to $20,000 in student loans for many borrowers.

In June, the U.S. Supreme Court struck down the Biden plan, setting the stage for interest rates to resume on Sept. 1 and loan payments to resume in Oct. 2023.

RELATED: In wake of SCOTUS student-debt ruling, MSU Denver doubles down on affordability

If I’m a student, do I have to make payments?

No, as long as you’re enrolled at least half-time and your loans have been placed in in-school deferment. If you’re uncertain about the status of your loans, please log in to your studentaid.gov account to see your loan balances. Your main directive is to make informed decisions and borrow responsibly and only what you think you’ll need.

If I’m a student, is there anything I should do?

Yes. Familiarize yourself with your loans and your servicer now so you’re ready once it’s time to begin making payments. We’re here and prepared to counsel families and students on what’s needed to prepare.

What’s a loan servicer?

A loan servicer is a company that handles the billing and accounting for your loan. For federal student loans, the servicer is the middleman between you and the federal government, which lent you the money for school.

What if I don’t feel like dealing with this?

That’s understandable. Borrowers are busy with jobs and family responsibilities. But it’s important to confront your loans head-on and contact your lender, if necessary. If you don’t contact your lender, they won’t know how to help you address your concerns.

The more informed you become, the better prepared you’ll be to face down financial challenges. Where there’s a lack of understanding, there’s that daunting feeling of panic and (being overwhelmed). Take action today.

OK, what do I do?

The first step is to identify your student-loan servicer. You can do so by visiting studentaid.gov, which can provide the name and number of your loan servicer. At the same time, update your contact information for the U.S. Department of Education.

Millions of student-loan borrowers have a new servicer, adding to the confusion of restarting payments. Verify how much you owe, your monthly payments and how to pay. This is especially important if you think you can’t pay. If you interact with your servicer, you can tell them what’s going on. They’ll guide you to the next best step.

How do I keep up with my servicer?

One thing I don’t think students and families do enough is follow their student-loan servicer on social media. Download their app. That way, you’ll always be informed.

What if my loans have more than one servicer?

Make sure you contact all of your servicers. It’s a good personal-finance practice to have a complete picture of all your debts — not just student loans but also car payments, credit-card balances and home mortgage.

With the Biden plan dead, do I have any options?

Yes. If you can’t make your payments, explore these options:

• The Fresh Start Initiative: a one-time, temporary program that offers special benefits to those with defaulted federal student loans.
• The Saving on a Valuable Education (SAVE) plan: to help some borrowers save hundreds of dollars on monthly repayments and protect their credit.
• Find even more options thanks to the Department of Education’s Loan Simulator, which allows you to enter your information to learn about a variety of payment options.
• The Loan Simulator also offers helpful details on how to prepare for student-loan payments to restart.

Does this mean collection agencies will start calling?

Yes, when the loan-repayment pause occurred back in 2020, it also paused collection calls for defaulted student loans. If you defaulted on your student loan, interest will begin accruing again now that the moratorium has expired — and collection calls may follow for borrowers in default.

If you do get a collection call, don’t panic, but do get in touch with your servicer to learn more about how to get out of default.

Will scammers start calling too?

Unfortunately, yes. Families and students should be on the lookout for an uptick in student-loan and debt-relief scams. Just be aware that the Department of Education or your loan servicer will never call you and offer something that seems too good to be true. We don’t want our borrowers to be taken advantage of.

What if I want to learn more?

Attend “Repayment 101: Get Help With Your Student Loans,” a free Department of Education webinar that will walk participants through repayment plans, programs and other valuable information.

The hourlong webinar will take place Sept. 14 at 5 p.m. Mountain Time.

Can’t attend? The webinar will be posted the next day on the Federal Student Aid Outreach channel on YouTube: https://www.youtube.com/@FSAOutreach