Student Loan Payments and Collections Are Back

What You Need to Know

After a long pause that began during the COVID-19 pandemic, federal student loan payments and collections in the United States are officially back.

In this article, we’ll explain what has changed, who will be affected, what the deadlines are, and how to prepare for this new phase.

A Brief History: The Payment Pause

In response to the pandemic, the U.S. Department of Education introduced a temporary halt to federal student loan payments in March 2020 as part of the government’s emergency relief efforts.

This measure included the following:

• A pause on mandatory monthly payments
• Suspension of interest accrual (0% rate)
• Halt of debt collections and enforcement actions

Although originally designed to be temporary, the pause was extended multiple times over the years.

However, in 2023, Congress determined that the pause would end permanently as part of the debt ceiling agreement.

Starting in the second half of that year, payments began to gradually resume.

When Did Payments Resume?

Mandatory federal student loan payments officially resumed in October 2023.

Debt collection activities for delinquent accounts resumed in 2024, following the end of the “Fresh Start” program—a temporary initiative that gave borrowers in default a chance to reset their loans without penalties.

For those who were already behind on payments before the pandemic, this restart may involve calls from collection agents, delinquency notices, and impacts on credit scores.

Who Is Affected?

The return of payments impacts all federal student loan borrowers in the U.S., including:

• Graduates and postgraduates who finished school before or during the pandemic
• Students who paused their education but had active loans
• Individuals already enrolled in refinancing or deferment programs

Note that private student loans were not included in the federal pause and continued operating as normal throughout the pandemic.

Financial Impact of the Resumption

For many American families, the return of student loan obligations represents a new burden on their monthly budget.

It’s estimated that the average monthly payment per borrower ranges between $200 and $400, depending on the balance and repayment plan.

This amount can lead to difficulties in covering basic expenses and may cause delays in other payments, such as credit card bills and rent.

How to Prepare: Key Steps

1. Check Your Loan Status

Visit the Federal Student Aid portal (studentaid.gov) to review essential information such as

• Total amount owed
• Due date of your next payment
• The name of your loan servicer (the organization responsible for handling your student loan account)

2. Update Your Contact Information

Make sure your address, phone number, and email are current with your loan servicer. Many important communications are sent via email or traditional mail.

3. Review or Enroll in a Repayment Plan

There are several repayment options available, and you might be eligible for one of the following:

• Standard Plan: This option features consistent monthly payments designed to pay off your loan within a decade.
• Income-Driven Repayment (IDR): Your monthly payment is calculated based on your income and family size, making it more manageable for those with limited earnings.
• SAVE Plan: Introduced in 2023, this updated income-based plan offers enhanced benefits, including lower payments and expanded forgiveness opportunities.

4. Consider the “Fresh Start” Program (If Applicable)

If you were in default before the pandemic, you may benefit from the Fresh Start program, which:

• Removes the default status
• Restores access to federal benefits (such as financial aid)
• Prevents aggressive collections and negative credit reporting

The Return of Collections: How It Works

With the end of the tolerance period, loan servicers and collection agencies have resumed legal actions against delinquent borrowers, including negative credit reporting.

From this point, borrowers may also face:

• Tax refund offsets by the IRS
• Wage garnishment through court orders

Alternatives and Relief Options

Even with payments returning, there are still legal options available to ease the impact, such as

Requests for deferment or forbearance for temporary relief

Refinancing with private lenders (note: federal protections are lost)

Public Service Loan Forgiveness (PSLF) for those working in qualifying jobs

Forgiveness due to disability or school closure

Written by

Gabriel Gonçalves