A First Look at Student Loan Repayment After the Payment Pause

By: U.S. Undersecretary of Education James Kvaal

After more than three years, in June 2023, Congress ended the student loan payment pause, which suspended payments and interest for the duration of the pandemic. This fall, more than 28 million borrowers are returning to repayment, an unprecedented challenge for both borrowers and the Department of Education.  

Today, the U.S. Department of Education (Department) is releasing data showing that 60 percent of the 22 million borrowers with payments due in October made those payments by mid-November. More than 4 million of these borrowers owe payments for the first time. Millions more were not making payments prior to the payment pause because they were delinquent or obtained a deferment or forbearance. (These figures exclude borrowers who are returning to repayment this fall but did not have a payment due in October, such as those who returned to school, recently left school and do not yet owe payments, or who are covered by the Department’s recent actions to address servicing errors.)

While most borrowers have already made their first payment, others will need more time. Some are confused or overwhelmed about their options. We want to make sure borrowers know that our top priority is to support student loan borrowers as they return to repayment.

To give borrowers breathing room while they work student loan payments back into their monthly budgets, we created the 12-month on-ramp period. Until next September, borrowers will be protected from the harshest consequences of missed payments, such as delinquency, default, and mandatory collections.

In addition, this year, President Biden created the SAVE Plan, the most affordable loan plan ever, especially for borrowers with high debts and low incomes. The SAVE Plan is an income-driven plan, which means payments are set on a slide scale based on how much borrowers earn. Already, more than 5.5 million borrowers are enrolled in the SAVE Plan, including 2.9 million who are protected from making any payments at all.

Because student loans should not come before the necessities, borrowers earning less than about $15 an hour, or more if they have families to support, will have $0 payments on their debt. Borrowers who still owe a payment are saving roughly $102 per month, or $1,244 per year. The SAVE Plan also eliminates runaway interest that can cause balances to grow even for borrowers paying what they owe.

The Department has also worked tirelessly to fix broken loan forgiveness programs so that borrowers get the help they have earned. We have already approved nearly $132 billion in debt cancellation for more than 3.6 million borrowers through Public Service Loan Forgiveness and other reformed programs. For example, before the Biden-Harris Administration, only 7,000 borrowers in total received forgiveness through Public Service Loan Forgiveness. We reformed the program – and since President Biden took office, over 750,000 borrowers have received Public Service Loan Forgiveness. These are teachers, firefighters, nurses, and other public service workers who earned relief – and we are committed to delivering it to them.

We are not going to stop our efforts to fix the broken student loan system. Next summer, through the SAVE Plan, we will cut payments on undergraduate loans in half. We are creating new loan forgiveness programs through our regulatory process. We are helping borrowers with defaulted loans access these affordable plans through the Fresh Start program. And we will modernize the student loan servicing system next year, with stronger accountability for getting borrowers the help they need.

In the meantime, we will continue to give borrowers the information and support they need to take advantage of all of the benefits of federal student loans. We have given clear guidance to our student loan servicers that they will be held accountable if they don’t meet their basic contractual obligations to borrowers and the Department. We have created new capacity for the Department itself to communicate directly with borrowers and launched data-driven campaigns for struggling borrowers. We are working with outside groups like Civic Nation and the NAACP through the SAVE on Student Debt Campaign. And we are seeking funding from Congress to allow us to fully fund our borrower communication plans. More information is available on www.studentaid.gov.

Today’s data show that most borrowers are already making payments, while millions are benefiting from expanded student loan benefits and forgiveness. Borrowers who are still confronting the challenge of making room for student loans into their monthly budgets are protected from the worst consequences of missed payments through the on-ramp. We will not rest until the Biden Administration has fixed a broken student loan system.