Student Loan Payment Reporting Resumed

Highlights:

• The Biden administration on-ramp period and Fresh Start programs have come to an end and for the first time in five years, federal student loan servicers have started reporting loans as delinquent or in collections.
• For consumers that are new to repayment or those new to repaying again, the Federal Student Aid Office offers several steps and recommendations to get started.

What programs did the Biden administration implement around student loan repayments?

Federal student loan payments and interest were paused from March 2020 until September 2023 as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion economic stimulus bill. To help borrowers resume payments for the first time in more than three years, the Biden administration implemented the on-ramp and Fresh Start programs in August 2023.

• 12-month on-ramp period. To protect borrowers from becoming delinquent on their loans, late or missed payments between October 1, 2023 and September 30, 2024 were not reported to the three Nationwide Consumer Reporting Agencies (NCRAs) or referred to collection agencies. Also, during that on-ramp period, no federal student loans were placed in default.
• Fresh Start program. Some borrowers with defaulted student loans were eligible for certain benefits under the Fresh Start program. Under the program, defaulted loans were marked as current, among other benefits. Borrowers enrolled in the Fresh Start program, which ended in October 2024, were also able to choose new repayment plans, including income-driven repayment (IDR) options.

Recommendations for those new to repayment or those that have started paying again

Here are some recommendations from the Federal Student Aid Office for borrowers that are new to repayment or those that have started repaying again:

• Review your student loan balance on your Dashboard.
• Choose a repayment plan based on your income. Loan Simulator can help you decide which plan is right for you.
• Visit your loan servicer’s website if you need help. Loan servicers are an important resource.
• Pay your student loans online through your loan servicer’s website. Tip: Set up auto pay to ensure on-time payments.
• Review the various loan forgiveness options.

The impact on credit scores

Each person’s credit profile is unique and individual credit score impacts of a federal student loan being reported as late or in collections will vary. In evaluating the potential impact on credit scores, it is important to understand what a credit score is and how credit scores are calculated. How long information stays on a consumer’s credit report depends on the type of information and whether it’s considered “positive” or “negative.” Credit scoring models generally look at how late payments were, how much was owed, and how recently and how often payments were missed.

Reviewing Your Credit Report

As always, consumers can review their Equifax^® credit report online free of charge via myEquifax™ or request their credit report through AnnualCreditReport.com. If a consumer identifies information that looks to be incorrect or inaccurate, they should file a dispute.

Consumers can also order credit reports by phone at (877) 322-8228 or by mail at the address below:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Your Equifax credit report will be mailed to you within 15 days.

Creating a budget

It is also a good idea to take a look at your budget to understand how your debt payment can fit into your monthly expenses. The most successful budgeters balance their needs and wants along with long- and short-term savings goals. To begin, list your:

• Mandatory monthly expenses, like: rent, food and debt payments
• Discretionary monthly expenses, like: entertainment and retail purchases
• Monthly savings goals

Then, decide how to divide your monthly income across each of these categories. It's critical to prioritize your mandatory expenses, including your student loan payments.

The 50/30/20 method simplifies this process by splitting your monthly paycheck according to three percentages: 50% of your income goes to mandatory expenses, 30% goes to discretionary expenses and 20% goes to savings. Adjust the percentages to fit your financial circumstances. If you need to make room in your budget, look to reduce your discretionary expenses.

Even with a customized budget, some borrowers may still struggle to make their student loan payments. If you do experience hardship, contact your loan servicer immediately to determine whether you qualify for a repayment plan or other relief, such as deferment or forbearance.

If you haven't made student loan payments for several years, it may be difficult to fit them back into your budget. However, doing so is an important step on the path toward overall financial health.