After more than three years of COVID-related reprieves, Oct. 1 ushers in the resumption of federal student loan repayments. (Cue the groans from the millions who are impacted.)

For those who paid off student loans a long time ago, it may be hard to conjure up empathy, but please try to hold back on judgment, so we can encourage tens of millions of borrowers to get back on track.

Where should I start?

Although most borrowers have been preparing for this moment, there are still those who need to act right now. If you haven’t heard from your loan servicer, get in touch with them right now to confirm your personal information, loan amounts, interest rates and payment plans. Make sure you have auto-debit enrollment to avoid missed payments and penalties.

What if I can’t afford payments?

Head to the Federal Student Aid website (studentaid.gov) and use the loan simulator. This easy-to-use tool allows you to calculate student loan payments and choose the repayment plan that best meets your needs. The repayment options include Income-Driven Repayment plans (IDR), the newest of which is called the “SAVE (Saving on a Valuable Education)” plan.

What IS the ‘SAVE’ plan?

SAVE is a modification of the Income-Driven Repayment (IDR) plans already available. Like its predecessors, SAVE helps borrowers with direct federal student loans that are in good standing, but who are having financial difficulties.

Monthly payments for SAVE are based on the borrower’s monthly income and the size of the borrower’s family, a valuable feature for those who have had kids.

SAVE also treats interest differently. If your regular payment isn’t enough to cover the interest owed at that time, the unpaid interest is automatically erased. Additionally, single borrowers who earn less than $15 per hour will not have to make any payments. If you previously enrolled in the REPAYE IDR plan, you will be automatically enrolled in the SAVE plan.

Can I qualify for loan forgiveness under SAVE?

Yes! Under SAVE, borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. If you work for a government or not-for-profit organization, you can still enroll in the Public Service Loan Forgiveness (PSLF) program.

What if my budget is tight or I miss a payment?

Most borrowers have been combing through their budgets to free up even a few more dollars to direct toward their payments. If you are really tight, you may want to reduce your retirement (or other savings) contributions to alleviate the cash flow burden. If possible, try to maintain any match that employers provide.

If you do miss a payment, don’t freak out.

There will be a 12-month reprieve (aka a “temporary on-ramp”), during which if you miss a payment, the U.S. Department of Education will not report anything to credit agencies, preventing a hit to delinquent borrowers’ credit scores. The education department will also not consider these loans delinquent, nor put them into default or refer them to debt collection agencies. Importantly, interest will also continue to accrue on the missed payments.

Loan relief pitches

If you’ve been inundated with loan relief pitches, you may be wondering if they’re worth it?

Probably not. The Federal Trade Commission recently issued a warning, reminding borrowers that they don’t have to pay for help managing their student loans.

One big red flag: If someone tries to charge you up front, before they’ve done anything. Another: the promise of quick loan forgiveness, which is a pipe dream! If you spot a scam, report it to the FTC at ReportFraud.ftc.gov.

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