Student loan payments are restarting after the federal pause ended
Federal student loan payments stopped in March 2020 during the pandemic. That pause ended on September 1, 2023, and borrowers who had federal loans began making monthly payments again. If you own a home and carry student debt, restarting payments affects your monthly budget and may change how much you can borrow or refinance.
The pause included no interest accrual and no required payments. Once payments resumed, interest started accumulating again, and monthly bills returned to your loan servicer. If you did not receive a notice from your loan servicer before payments restarted, contact them directly — they can tell you your current balance, interest rate, and payment amount.
Homeowners with student debt need to account for these payments when calculating their debt-to-income ratio for a mortgage, refinance, or home equity line of credit. Lenders look at your total monthly obligations, including student loans, to decide how much you can borrow. Restarting payments may lower the amount a lender will approve.
Key Takeaways
- Federal student loan payments resumed on September 1, 2023, after a three-year pause, and interest began accruing again on all federal loans.
- Your monthly payment amount depends on your loan type, balance, and repayment plan — contact your servicer to confirm the exact figure.
- Lenders factor student loan payments into your debt-to-income ratio when you apply for a mortgage or refinance, which may reduce the amount you can borrow.
- Income-driven repayment plans can lower your monthly payment if the standard amount creates hardship, though you must enroll through your servicer.
- Private student loans were not affected by the federal pause and continued requiring payments throughout 2020 to 2023.
How your payment amount is calculated
Your monthly payment depends on which federal repayment plan you are on. The standard plan divides your total loan balance into equal payments over 10 years. Income-driven plans — Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR) — calculate payments as a percentage of your discretionary income, usually 10 to 20 percent.
When payments restarted, borrowers on income-driven plans had their payments recalculated based on their most recent tax return on file with the Department of Education. If your income changed significantly since that return, your payment may be higher or lower than your actual current situation. You can update your income information with your servicer to recalculate.
Your loan servicer is the company that collects your payments. You can find yours by logging into studentaid.gov or calling the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). Your servicer will tell you your exact payment amount, due date, and which plan you are on.
Impact on your mortgage borrowing power
Lenders use your debt-to-income ratio (DTI) to decide how much you can borrow for a home purchase or refinance. This ratio divides your total monthly debt payments by your gross monthly income. Student loan payments count as debt, so restarting them increases your DTI and may lower the amount a lender will approve.
Most lenders cap DTI at 43 to 50 percent, depending on the loan type and your credit profile. If your student loan payment is $500 per month and your gross income is $5,000 per month, that payment alone uses 10 percent of your DTI ceiling. The higher your student loan payment, the less you can borrow for a mortgage.
If you are planning to buy or refinance, calculate your new DTI before you apply. Add up all monthly debt payments — student loans, car loans, credit cards, mortgage — and divide by your gross monthly income. If the number is close to your lender's limit, lowering your student loan payment through an income-driven plan may help you may have access to for a larger mortgage.
Income-driven repayment plans and payment relief
If your standard payment is unaffordable, you can switch to an income-driven plan. These plans cap your payment at 10 to 20 percent of your discretionary income (your income minus 150 percent of the federal poverty line for your household size). Your payment may drop significantly, though you will pay interest for a longer period and owe more total interest over time.
To enroll in an income-driven plan, log into your servicer's website or call them directly. You will need to provide your income information, usually from your most recent tax return. The servicer will recalculate your payment and send you a new bill. You can change plans once per year or whenever your income changes significantly.
Income-driven plans also offer forgiveness after 20 to 25 years of may have access to payments. If you make payments under an income-driven plan for the required period, any remaining balance is forgiven. This forgiveness may be taxable as income in the year it occurs, so consult a tax professional if you think you will reach forgiveness.
What changed for private student loans
Private student loans were not affected by the federal payment pause. If you borrowed from a private lender — Sallie Mae, Earnin, SoFi, or another bank — your payments never stopped. These loans continued accruing interest and requiring monthly payments throughout 2020 to 2023.
Private loans do not have income-driven repayment options or forgiveness programs. Your payment is set by your loan agreement, and your lender determines whether you can modify it. If you are struggling with a private loan payment, contact your lender directly to ask about forbearance, deferment, or a temporary reduction.
Some private lenders offer refinancing, which lets you take out a new loan to pay off the old one at a different rate or term. Refinancing can lower your payment if interest rates have dropped or your credit has improved, but it resets your loan term and may cost more in total interest. Compare the total cost before refinancing.
Preparing your budget for restarted payments
Before your first payment is due, contact your servicer and confirm the amount, due date, and which account to pay. Set up automatic payments if you have not already — most servicers offer a 0.25 percent interest rate reduction for autopay enrollment. Automatic payments also prevent missed payments, which can damage your credit and trigger default.
Add the payment to your monthly budget alongside your mortgage, property taxes, insurance, and other obligations. If the payment creates hardship, explore income-driven plans or contact your servicer about temporary forbearance or deferment. These options pause payments temporarily but allow interest to continue accruing, so they are short-term solutions only.
If you are behind on payments or in default, contact your servicer immediately. Federal loans in default can be rehabilitated by making nine on-time payments within 10 months, which removes the default status and restores your may be able to access for income-driven plans and other protections. The sooner you act, the more options remain available.
Public Service Loan Forgiveness and other programs
If you work in public service — government, nonprofit, military, or certain other sectors — you may be on track for Public Service Loan Forgiveness (PSLF). This program forgives remaining federal loan balances after 120 may have access to payments (10 years) of on-time payments under an income-driven plan while working full-time in a may have access to job.
The Department of Education temporarily waived some PSLF requirements during the payment pause, allowing many borrowers to count non-may have access to payments toward the 120-payment threshold. This waiver ended on October 31, 2023, but borrowers who had already received credit for those payments kept it. If you think you may be close to 120 payments, contact your servicer to request a PSLF payment count.
Teacher Loan Forgiveness is a separate program for teachers who work in low-income schools. After five years of full-time teaching, you can have up to $17,500 in federal loans forgiven. The rules and application process differ from PSLF, so check the Department of Education website if you teach in a may have access to school.
Frequently Asked Questions
What happens if I cannot afford my payment when it restarts?
Contact your servicer before your payment is due and ask about income-driven repayment plans, which can lower your payment to 10 to 20 percent of your discretionary income. You can also request forbearance or deferment, which temporarily pauses payments but allows interest to accrue. Do not skip payments without contacting your servicer — missed payments damage your credit and can lead to default.
Do I need to do anything to restart payments, or does it happen automatically?
Payments restart automatically if you are on the standard repayment plan. Your servicer will send you a bill with your new payment amount and due date. If you want to change to an income-driven plan or make other changes, you must contact your servicer — it does not happen automatically. Log into your servicer's website or call them to make changes before your first payment is due.
Will restarting student loan payments affect my ability to get a mortgage?
Yes. Lenders include your student loan payment in your debt-to-income ratio, which determines how much you can borrow. A higher student loan payment lowers your borrowing power. If you are planning to buy or refinance, calculate your new DTI with the restarted payment included, or consider switching to an income-driven plan to lower the payment before you apply.
Can I pay off my federal student loans early without penalty?
Yes. Federal student loans have no prepayment penalty, so you can pay extra toward principal at any time. Paying extra reduces the total interest you owe and shortens your repayment timeline. Make sure your servicer applies extra payments to principal, not to future payments, by specifying this when you pay.
What is the difference between forbearance and deferment?
Both pause your payments temporarily, but interest accrues differently. With forbearance, interest continues accruing on all loan types. With deferment, interest accrues only on unsubsidized loans; subsidized loans do not accrue interest during deferment. Both are short-term solutions — contact your servicer to discuss which option fits your situation.