It’s official. Federal student loan repayments will start in September, and it’s your job to get ready. After more than 3 years of deferrals by both administrations, the debt ceiling deal forced the end of the moratorium.

And if you owe money on Federal student loans, it’s going to be your responsibility to make sure you deal with them in the next ten weeks. Yes, there’s still a possibility of some student loan forgiveness, depending on the Supreme Court ruling. But you should prepare for repayments now.

Step 1. FIND your student loans! In the past three years your servicer may have changed, or changed names. So go to www.StudentAid.gov and log in using your FSA ID. (If you’ve forgotten that ID over the past three years, you can get help logging in using your email or phone number.)

Then you’ll find your loan servicer for each loan, along with a link and phone number. Make sure they have your latest contact information. You’ll soon receive notifications about the process for starting payments and the amount you will owe. The best thing you can do is set yourself up for automatic repayments taken directly from your checking account.

Step 2. Affording Repayments. If you’ve lost your job, or are earning less than before the pandemic, there are a number of steps you can take.

Go to www.StudentAid.gov and click on the tab marked “loan repayment.” You can immediately apply for an income-driven loan repayment plan. The amount of your payment reduction will be determined by your income, relative to your loan balance. Roughly, you’ll be paying 10% of your adjusted gross income. And at the end of 20 years of regular payments on undergrad loans, any unpaid balance will be forgiven. (At that point the forgiveness might be considered taxable income.)

(Note: Starting in 2024, there will be a new and improved income-based repayment plan, which has a formula that will exclude a higher level of income before calculating your reduced monthly payment.

Step 3. Consider Public Service Loan Forgiveness. You can learn more at StudentAid.gov. Here’s a link to that section. The waiver application period has extended through December 31, 2023 – another chance to get payments reduced and ultimately forgiven, saving you a fortune. Student loan servicer Mohela is the servicer for all PSLF plans.

Step 4. Apply now for an Income-Driven Repayment Plan. The process takes at least 60 days to complete, so by starting your application now, the initial September loan repayment amount may be lowered.
The first step in this application requires consolidating all your Federal student loans (not including grad school loans or parent PLUS loans). Only then will your income-based application be considered.

Student Loan expert Rae Kaplan of www.RaeKaplan.com offers some important tips if you’re applying for an income-driven plan right now.

First, Kaplan says you should make sure that as part of your Federal loan consolidation, you take advantage of a “one-time IDR adjustment”. This will allow your past periods of payment to be considered as part of the time period for ultimate loan forgiveness, instead of restarting the clock. This IDR adjustment is only available through December 31, 2023.

Second, Kaplan advises NOT linking your application to the IRS website to download your income information. Instead, she advises including your most recent pay stub (or lowest pay stub from the past 90 days) and attaching it to your printed application. And, importantly, she says you should hand-write on that pay stub the fact that you are paid weekly, bi-weekly, or monthly. That will forestall any delays.

Kaplan’s firm provides this entire service for a flat fee, and will also help you recertify for your income-driven plan each year. The ultimate goal of these plans is the forgiveness of the balance after 20 years on an income-driven payment plan.

Don’t procrastinate. It’s a hassle to deal with, but well worth it if you save a fortune in overall payments. And that’s The Savage Truth.