In response to the COVID-19 emergency, Federal Student Aid (FSA) initiated a payment pause for eligible federal student loans, set interest rates to 0%, and stopped collecting on defaulted loans (COVID relief measures). The Washington State Department of Financial Institutions (DFI) encourages federal student loan borrowers to prepare for repayment to resume.
Below is general information about the COVID relief measures ending Sept. 1, 2023, including information on Resuming Repayment, the new SAVE Repayment Plan, Public Service Loan Forgiveness/Temporary Expanded Public Service Loan Forgiveness (PSLF/TEPSLF), the Supreme Court’s decision regarding the Biden-Harris loan forgiveness plan and other helpful information.
Entering Repayment - Steps for Success
- Update Contact Information
Borrowers should expect to receive a billing statement from their student loan servicer and Federal Student Aid (FSA) before payments become due again. FSA is encouraging borrowers to verify their contact information, and make any necessary updates to their profile with their servicer and FSA as soon as possible.
Many borrowers may have a new student loan servicer. If you are unsure who your servicer is you can look up your loan information by logging into your FSA account and scrolling down to the “My Loan Servicers” section. You can also call the FSA Information Center at 800-433-3242.
- Verify Auto-Debit Enrollment Status
DFI encourages all borrowers previously enrolled in auto-debit to contact their servicer to verify their enrollment status and verify their auto-debit banking information on file with their servicer. Don’t assume that you are set up with auto-pay or that you don’t have auto-pay. Check with your servicer!
How do I start auto-pay? You can set up auto-pay through your student loan servicer’s website. The benefit of auto pay is 0.25% interest rate savings.
How do I stop auto pay? You can cancel auto pay through your student loan servicer’s website, BUT you will lose the 0.25% interest rate savings.
- Shop Repayment Plans
Borrowers’ financial situations may have changed dramatically during the payment pause. DFI and FSA encourages all borrowers to find a repayment plan that meets their needs and goals. FSA offers a loan simulator allowing borrowers to compare different repayment plans. Borrowers can access the loan simulator here: Loan Simulator | Federal Student Aid
Borrowers may want to consider applying for an income-driven repayment (IDR) plan or the new SAVE repayment plan to get a monthly payment tailored to your income and family size. Additional information regarding IDR application process is available here: Apply for Income-Driven Student Loan Repayment | Federal Student Aid.
Saving On A Valuable Education (SAVE) Repayment Plan
The new SAVE repayment plan replaces the existing REPAYE plan that was previously the most generous of the repayment plans. If you are on REPAYE you will automatically be enrolled in SAVE.
- What is so great about the save plan?
- Increases the income exemption from 150% to 225% of the poverty line.
- Eliminates remaining interest – your principal balance will not continue to grow month to month due to unpaid interest.
- For example: If $50 in interest accumulates each month and you have a $30 payment, the remaining $20 would not be charged.
- No longer requires spousal signature for people who are married but file taxes separately.
- Even more great save plan benefits go into effect in 2024
- Payments on undergraduate loans reduced from 10% to 5% of income above 225% of the poverty line.
- Payments for combo of undergraduate and graduate loans a weighted average of between 5% and 10% of income based upon the original principal balances of the loan.
- Borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. For example, if your original principal balance is $14,000, you will see forgiveness after 12 years. Payments made previously (before 2024) and those made going forward will both count toward these maximum forgiveness timeframes.
- Borrowers who consolidate will not lose progress toward forgiveness. They will receive credit for a weighted average of payments that count toward forgiveness based upon the principal balance of the loans being consolidated.
- Borrowers will automatically receive credit toward forgiveness for certain periods of deferment and forbearance.
- Borrowers will be given the option to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.
- Borrowers who are 75 days late will be automatically enrolled in IDR if they have agreed to allow the Department of Education to securely access their tax information.
- How do I apply for the save plan?
Sign in to your FSA account and fill out the new and improved income driven repayment plan application. See: Apply for Income-Driven Student Loan Repayment | Federal Student Aid.
Public Service Loan Forgiveness (PSLF) and Temporary Expanded Public Service Loan Forgiveness (TEPSLF)
- Will the payment pause count towards PSLF and TEPSLF?
Yes, so long as you meet the other qualifications for PSLF and TEPSLF. Be sure to certify your employment for the payment pause time period and your account will be updated to reflect these qualifying payments.
- What is the one-time account adjustment?
This is an effort by the Biden-Harris administration to fix a bunch of the issues with the PSLF and IDR plans. The Department of Education will adjust a borrower’s account by granting credit toward IDR and PSLF for:
- Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the loan type, or the repayment plan;
- Any month in which loans were in an eligible repayment, deferment, or forbearance status prior to consolidation;
- Months while a borrower spent at least 12 months of consecutive forbearance;
- Months while a borrower spent at least 36 cumulative months in forbearance; and
- Any month spent in deferment (exception for in-school deferment) prior to 2013.
- When do I have to recertify my IDR plan?
Follow the below steps to determine your recertification date.
- Log in to your FSA account and view your Dashboard.
- Select “View Details” in the My Aid section.
- In the Loan Breakdown section, select “View Loans.”
- Under each loan, you can select “View Loan Details.”
- In the Repayment Details section, find “IDR Anniversary Date.” This date is your new recertification date.
- Can I recertify early?
If your finances have changed you can recertify any time.
Biden-Harris Debt Relief Plan
- I applied for and was approved for the biden-harris debt relief plan – what now?
The United States Supreme Court prohibited implementation of the Biden-Harris Debt Relief plan. Thus, no loans can be discharged under the program.
- I was relying on that assistance, what do I do now?
The Biden-Harris administration is working on alternative ways to provide debt relief, but it will take some time. In the meantime, be sure to apply for an IDR plan.
- What is the “on-ramp” to repayment?
The “on-ramp” to repayment is meant to help borrowers avoid the harshest consequences of missed, partial, or late payments. For 12 months following start of repayment, missed, partial, or late payments will not lead to negative credit reporting, default, or loans being sent to collection agencies.
- Are there consequences if I do not make payments?
Borrowers who can make payments should do so, as payments will be due and interest will accrue during this on-ramp period. In addition, missed payments will not count toward loan forgiveness under any of the income-driven repayment plans or Public Service Loan Forgiveness.
Student Loan Forgiveness Scams
DFI and FSA encourages borrowers to remain vigilant against scammers offering financial aid or assistance, such as a “pandemic grant” or “Biden loan forgiveness.” For additional information on avoiding student loan forgiveness scams visit the FSA website Avoiding Student Aid Scams | Federal Student Aid.
Important Information for All Consumers
- If you received a loan from a lender and someone else is now attempting to collect the loan, the collection activity may be subject to the federal Fair Debt Collection Practices Act (FDCPA). If you are contacted by a third party claiming you owe a debt, you can request a “written validation notice,” which must provide the amount of the debt, the name of the creditor you owe, and your rights under the FDCPA. If you have questions regarding federal debt collection laws you can contact the Federal Trade Commission (FTC) at 1-877-FTC-HELP or online at www.ftc.gov.
- If you feel you have been the victim of a scam you can contact the FTC at 1-877-FTC-HELP (382-4357) or online at www.ftc.gov; or the Consumer Financial Protection Bureau (CFPB) at 1-855-411-CFPB (2372) or online at www.consumerfinance.gov
- If the scammers already have your bank account information, social security number, or other personal information, you may be a victim of identity theft. You can contact your bank and the three major credit bureaus to take appropriate precautions. The FTC has information for victims of identity theft online at www.ftc.gov.
- If you feel you have been the victim of a scam involving the internet you can contact the Internet Crime Complaint Center online at www.ic3.gov.
- If you feel you have been the victim of a financial scam and are concerned about your personal financial information, you can contact your banking institution and the three major credit bureaus. Procedures for contacting the credit bureaus are available on the FTC’s website at www.ftc.gov.
- If you live in another state, go to this webpage to find the regulator in your home state. http://mortgage.nationwidelicensingsystem.org/consumer/Pages/AgencyContacts.aspx.
Please know that the best and most up to date information regarding any of the above topics is available on the FSA website and through your student loan servicer. Below is a list of additional student loan resources that may be of assistance.
If you have additional questions or need to file a complaint, please contact DFI’s Consumer Services Division at (360) 902-8703.