Federal student loan payments are resuming after a three-year pause. The Department of Education announced borrowers must start paying their bills on August 30, meaning interest will begin accruing again on existing loans.
The announcement concerns over 40 million Americans, according to The Associated Press.
“People should know the clock starts ticking and interest starts accruing,” Scott Buchanan, the executive director at the Student Loan Servicing Alliance trade organization, told USA Today. “They should start contacting their servicers now.”
If you aren’t sure who your student loan servicer is, you can go to StudentAid.gov, find your account dashboard and scroll down to the “My Loan Servicers” section. You can also call the Federal Student Aid Information Center at 1-800-433-3243.
Student loan payments were paused in March 2020 to help borrowers during the COVID-19 pandemic, with multiple extensions since, the latest being in November 2022 by President Joe Biden.
Last year, Biden introduced a student loan forgiveness plan, which would cancel up to $20,000 of student debt for people making less than $125,000 a year individually and $250,000 for married couples. As of today, the plan is still in limbo. The Supreme Court will make a decision later this month.
College graduates who finished their studies during the pandemic are considered the most vulnerable. According to the AP, millions of recent graduates never had to make a loan payment, on top of the current forecast of an economic recession.
Student loans resuming will cost U.S. consumers $18 billion a month, the investment firm Jefferies estimated.
