Student loan forgiveness: When do I start repaying my student loans?

1 min readLast updated June 21, 2023by Rachel Carey

Paying back student loans can be a huge worry for new college graduates and their parents. As repayments are set to resume, discover how you can best prepare to repay your student loans.

When graduation looms, financial pressure mounts. For many, the closer you get to graduation day, a day that should be full of happiness and excitement, the more anxiety you feel about your financial future and paying off those student loans

This financial pressure was relieved for many when in March 2020, President Trump placed a pause on repaying federal student loans during the pandemic. This was then extended to December 31, 2022, by the Biden administration.  

According to Forbes, at the beginning of 2020, just 2.7 million borrowers had their federal loans in forbearance. That number grew to 24 million borrowers by the end of 2021. 

But with this pause shortly coming to an end, the financial pressure for students is once again mounting.  

When will student loan repayments restart? 

Following multiple extensions to the payment pause, it was confirmed by the Department of Education that payments will be due starting in October, with interest accruing again from September 1.  

This firm line on repayment comes following the passing of the debt ceiling bill, which stipulates the payment pause “shall cease to be effective” 60 days after June 30.  

Originally, the pause on payments and interest was due to expire 60 days after the Supreme Court ruled on two cases related to President Biden’s student loan relief plan.  

Biden’s relief plan sets out to forgive up to $20,000 in student debt for those who received a Pell Grant – a type of financial aid for a student who demonstrates exceptional financial need – and up to $10,000 if they did not receive the grant.  

Borrowers must also have government-held federal student loans to qualify. They must also have earned less than $125,000 (or $250,000 if married and filing a joint tax return) in either 2020 or 2021. 

No high-income individual or high-income household – in the top 5 percent of incomes – will benefit from this action. 

According to statistics from news outlet CNBC, if the Supreme Court clears the plan, approximately 14 million people could see their student loan balance cleared entirely. 

37 million people could see a portion of their debt forgiven, and the country’s outstanding student loan balance would reduce by $400 billion from $1.7 trillion to $1.3 trillion.  

However, while the Supreme Court ruling is due soon, those with student loan repayments need to prepare to start making instalments.  

What are my student loan repayment options? 

Generally speaking, with federal student loans, you do not have to start paying back your student loans until six months after graduation.  

It’s important to remember federal student loan recipients can change their repayment plan for free once every year, subject to certain circumstances.  

Here are some of the main ways to repay your student loans:  

  • Standard repayment plans – students will make equal monthly repayments for 10 years. You are automatically enrolled in this plan when you take out your student loan.  

  • Graduated repayment plans – the amount you repay each month will increase every two years over a 10-year period. This is due to nearly graduated student salaries rising over time.  

  • Extended repayment plans – this is similar to the graduated repayment plans but allows you to extend your repayment time from 10 to 25 years. This reduced the monthly amount you pay but increased the amount of interest you owe.  

  • Income-driven repayment (IDR) plans – the amount you pay is tied to a portion of your income. You can also extend the repayment time to 20 or 25 years. Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20  or 25 years, depending on when you received your first loan. 

There are four different types of IDR plans: 

  • Revised Pay As You Earn Repayment Plan (REPAYE Plan) – you pay 10 percent of your monthly discretionary income. Any remaining debt after 20 or 25 years is forgiven. 

  • Pay As You Earn Repayment Plan (PAYE Plan) – you pay 10 percent of your monthly discretionary income but never more than the 10-year Standard Repayment Plan amount. Any remaining debt after 20 years is forgiven. 

  • Income-Based Repayment Plan (IBR Plan) – if you’re a new borrower on or after July 1, 2014, you pay 10 percent of your discretionary income per month but never more than the 10-year Standard Repayment Plan amount, and any remaining debt after 20 years is forgiven. If you’re not a new borrower on or after July 1, 2014, you pay 15 percent of your discretionary income per month but never more than the 10-year Standard Repayment Plan amount, and any remaining debt after 25 years is forgiven. 

  • Income-Contingent Repayment Plan (ICR Plan) – you pay 20 percent of your discretionary income or what you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income. Any remaining debt after 25 years is forgiven. 

How do I prepare to make student loan repayments? 

After three years of no repayments, making repayments again, or for the first time, is a big adjustment. Waving goodbye to part of your paycheck may be a bitter pill to swallow.  

One of the first and most important things to do before repayments begin is to contact your loan provider. As repayment dates differ depending on who manages your loan, they can tell you when payments are due and how much you will have to pay.  

You can also speak to your loan provider about payment plans that work best for you.  

This will allow you to start budgeting and preparing for repayments rather than have them sneak up on you.  

Seeking the right money advice can also make a big difference to your repayment plan and can prove far more valuable than the price of not finding the advice you need. Getting expert advice is for everyone and getting it before financial situations get dire could save you a lot of money. 

If you’re wondering how to repay your student loans, seeking expert advice is best. Financial advisors are on hand to provide advice and guidance, taking the time to learn all about your situation to create a tailored plan so you can meet your financial goals.  We can connect you to a trusted financial advisor tailored to your needs.  

Find an expert advisor   

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.