What to know about the end of the federal student loan repayment pause and grace period

Federal student loan payments and interest were paused for roughly three years during the Covid-19 pandemic, but that pause has ended along with the grace period granted to borrowers that shielded late or missed payments from being reported to credit bureaus.

Federal student loan interest accrual resumed on September 1, 2023, and student loan payments began to be due again starting in October of 2023. Some borrowers were granted protection from negative credit reporting in the year that followed, which was referred to as the “on-ramp” period. During the on-ramp period, when borrowers had late or missed federal student loan payments, loan servicers automatically placed their student loans in forbearance, and this kept their loans from being marked as delinquent on their credit reports.

This credit shield for federal student loan borrowers ended on September 30, 2024. Now, if federal student loan payments are late or missed, a student’s loans will no longer be placed in forbearance but instead will be marked as past due. Student loan borrowers who are late or miss payments may now experience negative consequences, such as a potential drop in their credit score.

If you’re one of the millions of borrowers with federal student loans, there are some things to know about the end of the student loan repayment pause and on-ramp period and how you may want to adjust financially to best deal with it.

What was the federal student loan repayment pause?

During the student loan payment pause — which began on March 13, 2020, and was also known as an administrative forbearance — if your federal student loans were eligible, your loan payments were paused, and interest rates were placed at zero percent. In practice, that meant that federal student loan borrowers weren’t required to make any student loan payments during the student loan repayment pause, and their loans weren’t accumulating interest during that time.

In addition, loans that were on autopay were stopped, and collection activities on defaulted loans were also paused.

When did the federal student loan repayment pause end?

Most federal student loan borrower's first student loan payments following the pause were due in October 2023.

If you have federal student loans that were impacted, your monthly student loan payment amount and due date depend on your loan terms, which you’ll find on your monthly bill from your loan servicer.

You can expect to receive your student loan bill at least 21 days before the bill’s due date. If you have any questions, contact your loan servicer.

What was the federal student loan “on-ramp” period?

The U.S. Department of Education instated a one-year “on-ramp” period in which missed, partial, or late payments weren't reported to credit agencies. Federal student loans also didn’t go into default or get deferred to debt collection agencies during this period. This was in effect from October 1, 2023, and continued until September 30, 2024.

It’s worth noting that even though student loan borrowers didn’t see delinquent payments appear on their credit reports, their payments were still due, and their outstanding loans still accrued interest in the background as of September 2023.

What happens to existing federal student loans now that loan repayments have resumed, and the grace period has expired?

Now that federal student loan payments have resumed, your existing loan amount will be reflected on your monthly bill, reduced by any loan forgiveness or cancellation you may have been eligible for.

While federal student loan holders were granted an on-ramp period to adjust to the end of the repayment pause – which shielded late or missed payments from being reported to credit bureaus – that shield has also ended. Late or missed federal student loan payments may impact a borrower's credit score going forward.

Steps to consider taking now that the federal student loan repayment pause and grace period have ended

Now that federal student loan payments are due again, and borrowers are no longer shielded from having missed or late payments reported to credit bureaus, consider exploring some of these action items.

Update your contact information (if needed)

Make sure your contact information is updated on the Federal Student Aid website. Also, update your information on your loan servicer’s website, so that you can receive information you need about your student loans in a timely manner.

Check your credit score

The end of the grace period for federal student loan borrowers means that missed and late federal student loan payments may now impact your credit score.

Having a good credit score can be important for a number of reasons, including that it can help you get approved for a car loan or mortgage, or rent an apartment.

Credit monitoring from Chase Credit Journey^® is free for everyone. By enrolling in Credit Journey, you can keep track of your score and receive credit monitoring alerts to help determine if your score has been impacted by late or missed payments, which can result from the end of the federal student loan repayment grace period.

Explore loan repayment options if your monthly payments feel unmanageable

If your monthly student loan payments feel unmanageable, you might want to consider applying for an income-driven repayment (IDR) plan. With an IDR plan, your monthly payment is adjusted based on your income and the size of your family.

Of note, on July 18, 2024, an injunction was issued by the federal courts that blocked the implementation of parts of the SAVE plan, one of the IDR plans. Students can still apply for this plan, but their plan will be placed in forbearance until a resolution is reached. For updates about the plan, please visit StudentAid.gov.

Other student loan repayment options include:

• Standard Repayment Plan
• Graduated Repayment Plan
• Extended Repayment Plan
• Pay As You Earn Repayment Plan (PAYE)
• Income-Based Repayment Plan (IBR)
• Income-Contingent Repayment Plan (ICR)
• Income-Sensitive Repayment Plan

If you submit an application and are approved for a repayment plan, you can view your new payment amount, which will also be displayed on your loan servicer's website when your first bill is issued that takes into account your repayment plan.

Consider enrolling in autopay

If you enroll in autopay for your federal student loans, your servicer will automatically deduct your monthly payment from your bank account.

Choosing to autopay is optional, but it provides a 0.25% discount on your loan’s interest rate. You'll be alerted before every withdrawal when you use autopay.

Establish a new budget and determine if you need to reduce your spending

You may have removed student loan payments from your budget because of the student loan repayment pause. Now that it’s ended, you may need to adjust your spending to account for this change.

It might be a worthwhile exercise to put together a new monthly budget so you can best set yourself up to meet your financial goals.

Final thoughts

While some borrowers will likely find the end of the pause and grace period challenging, there are steps you could take to help make the monthly payments more manageable, and to stay on top of your finances.