Return to Repayment

Attorney General Ellison encourages Minnesota student loan borrowers to understand their rights and obligations as student loan payments resume for federal student loans this fall.

More than three years after student loan payments were paused, interest on student loans began accruing again on September 1, 2023, and first payments are due in October. This means that if you have student loans and are not in school (or did not leave school within the last six months), you will receive notice from the U.S. Department of Education at least 21 days before your payment due date with your payment amount.

As the end of the student-loan payment pause nears, it is important for borrowers to be well-informed about the details of their loans and take precautions to avoid bad actors who may take advantage of borrowers.

To address uncertainty and answer questions about the return to repayment, the Attorney General’s Office has created the following FAQs, in addition to resources located on the AGO’s website, to assist borrowers in the return to repayment and interest accrual.

How does the repayment pause ending impact in-school borrowers? What happens if I leave school?

If you’re in school, only student loan interest will resume starting on September 1, 2023. Students do not need to begin making payments in October.

After you leave school (or drop below half-time), you usually get a six-month grace period. During your grace period, you do not have to make loan payments. Consider an income-driven repayment (IDR) plan, which could make your monthly payment more affordable. Compare your loan repayment options through Loan Simulator. You can also contact your loan servicer to make sure you’re on the best repayment plan for you.

Unless you ask for a different repayment plan, your loan servicer will put you on the Standard Repayment Plan.

How should I prepare for student loan payments to restart?

First, make sure you know whether you have public or private loans, and which loan servicer is yours. Some servicers, such as Navient and FedLoan Servicing, transferred servicing to other companies during the payment pause, so you may have a new servicer. You can also get an estimate of your payment amount and compare repayment plans by using Loan Simulator.

Second, update your contact information in your profile on your loan servicer’s website and in your StudentAid.gov account.

Third, if you need assistance in exploring available options for repaying your student loans, consider reaching out to the Minnesota student loan financial counseling program through Lutheran Social Services.

Fourth, consider applying for an income-driven repayment (IDR) plan. An IDR plan can make your payments more affordable, depending on your income and family size. The summer of 2023, the U.S. Department of Education will begin implementing the Saving on a Valuable Education (SAVE) Plan, which is the most affordable repayment plan the Department offers. Borrowers signed up for the current REPAYE plan will be automatically enrolled in SAVE.

Fifth, review your auto-debit enrollment or sign up for the first time to automatically deduct your monthly payment from your bank account. To do so, log in to your loan servicer’s website or contact your loan servicer directly. If you were enrolled in auto-debit before the payment pause and you would like to resume when payments resume, you need to confirm your auto-pay enrollment with your student loan servicer if you haven’t already done so.

The Department of Education has created the following webpages to help borrowers prepare:

StudentAid.gov/restart – For borrowers who were in repayment before and are going to resume payments
StudentAid.gov/firstpayment – For borrowers who haven’t made a payment before

What if I can’t make payments right away when payments resume in October?

Circumstances can arise that make it difficult to make your loan payments. If you have trouble making payments, you can request help to try to avoid going into default. Some options for federal loans may include changing your repayment plan, obtaining a forbearance, or getting a deferment. These options may or may not apply to private and non-federal loans.

The U.S. Department of Education has finalized the most affordable repayment plan in history. It’s called the Saving on a Valuable Education (SAVE) plan. Borrowers signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in SAVE. The SAVE Plan, like other income-driven repayment (IDR) plans, calculates your monthly payment amount based on your income and family size. The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.

The Minnesota Legislature provided funding for a student loan financial counseling program through Lutheran Social Services, a nonprofit organization. If you need assistance in exploring available options for repaying your student loans, Lutheran Social Services may be available to help individuals navigate repayment options, help determine eligibility for alternative programs, and help develop an individualized action plan. This financial counseling program is free and confidential. In-person appointments are available across Minnesota. Phone or virtual appointment options are also available. Contact the Lutheran Social Services Student Loan Counseling Program at the following address:

Lutheran Social Services Financial Counseling
PO Box 306, Duluth, MN 55801
(218) 529-2227 or (888) 577-2227
www.lssmn.org/financialcounseling/financial-wellness-services/student-loan-debt

What about the Supreme Court case on debt relief?

On June 30, 2023, the U.S. Supreme Court issued a decision striking down the federal government’s student loan debt relief plan to forgive up to $20,000 in student loan debt for eligible borrowers. Borrowers who were expecting to have their loans partially or entirely discharged under the debt relief plan must resume payments in October. More information on the Supreme Court’s decision can be found here.

What loan cancellation or forgiveness programs are available?

Some borrowers may qualify to have their student loans forgiven or cancelled in certain situations. A cancelled or forgiven loan does not have to be repaid. Situations which may make federal loans eligible for forgiveness include total and permanent disability, working in certain public service or teaching positions, closure of your school, or enrollment in an income-driven repayment plan. Fewer options are available for non-federal student loans.

Forgiveness programs for federal student loans include:

Public Service Loan Forgiveness (PSLF)

If you work full-time in certain public service jobs and have made 120 payments on your Direct Loans (after October 1, 2007), the remaining balance that you owe may be forgiven. Public Service Loan Forgiveness (PSLF) is a program for people who work in public service in federal, state, tribal, or local government, or for a non-profit organization. Borrowers can use the PSLF Help Tool to search for a qualifying employer, learn what actions they may need to take to become eligible for PSLF or TEPSLF, and generate a PSLF form. Borrowers will need to provide an email address for an authorized official who can certify their employment and sign their form.

Income-Driven Repayment Plan

If you are enrolled in an income-driven repayment plan (e.g., Revised Pay As You Earn Repayment Plan, a/k/a REPAYE Plan), you may be eligible for loan forgiveness after consistent payments for 20 to 25 years, depending on the terms of the plan.

Loan Forgiveness for Teachers

If you teach full-time for five consecutive years in a low-income elementary school, secondary school, or educational service agency, you may be able to have as much as $17,500 of your federal loan cancelled. For more information about this program, consult the Department of Education’s website at: www.studentaid.gov/understand-aid/types/grants/teach

Total and Permanent Disability

Federal student loans may be cancelled for total and permanent disability that is established in one of three ways listed below. Nelnet assists the U.S. Department of Education in administering the Total and Permanent Disability (TPD) discharge process. For more information about the TPD discharge process, you may visit Nelnet’s website at www.disabilitydischarge.com.

The borrower has certification from a physician that they are unable to work and the condition has lasted or is expected to last for a continuous period of not less than 60 months;
The borrower is receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits; or
If the borrower is a veteran, they may submit documentation from the U.S. Department of Veterans Affairs (VA) that shows that the VA has determined that the borrower is unemployable due to a service-connected disability.

Closed Schools

You may be eligible for forgiveness of your federal loans if:

Your school closed while you were enrolled and you cannot complete your program because of the closure; or
Your school closes within 120 days after you withdrew.

You are generally not eligible for closed school discharge if you:

Withdrew more than 120 days before the school closed;
You are completing a comparable educational program at another school through a teach-out agreement with the school or by transferring credits or hours learned at the closed school to the new school; or
You completed all coursework for your program at the closed school (even if you did not receive a diploma or certificate).

Note, however, that the U.S. Department of Education may extend the 120-day period based on certain circumstances.

Students interested in closed-school discharge should contact their loan servicer about the application process. More information is also available on the Department’s website. If you live in Minnesota and your school recently closed, you may also be able to find resources from the Minnesota Office of Higher Education.

Borrower Defense to Repayment for Federal Loans

You may be eligible to have the Department forgive your federal student loans if your school committed fraud against you, misrepresented its services to you, or otherwise violated applicable state law. Information on standards applied by the Department and how to apply for the program or download an application is available on the Department’s website.

When applying for borrower defense, you may also request in your application that your federal loans be placed in forbearance or have collections stopped for up to 12 months. Interest will continue to accrue on your account during the duration of the forbearance, however, and you are obligated to pay back that interest if your loans are not forgiven. You can find information about the forbearance process at the webpage noted above.

If you have questions about borrower defense options, visit www.studentaid.gov/borrower-defense/, you may also call the federal government’s borrower defense hotline at (855) 279-6207 or send an email to FSAOperations@ed.gov.

What happens if I completed Public Service Loan Forgiveness (PSLF) during the payment pause?

Paused payments count toward PSLF as long as you meet all other qualifications. You will get credit as though you made monthly payments.

To see these qualifying payments show up in your account, you must submit a PSLF form certifying your employment for the payment pause time period. Your count of qualifying payments toward PSLF updates only when you certify your employment.

Note: You cannot get credit toward PSLF if you’re:

in school (more than half-time status),
in your grace period,
in a regular forbearance,
in certain kinds of deferment, or
in bankruptcy status.

What happens if I default on my student loans?

Borrowers who do not make their student loan payments for a set period of time are considered to be in default. Consequences of default can have a negative effect on a borrower’s finances, and could include collection actions, a damaged credit rating, wage garnishment, or legal action. Options for getting out of default may include rehabilitation or consolidation. The following sections discuss available options:

When a loan defaults, the debt may be referred to a collection agency. The sections below discuss collection actions and dealing with debt collectors:

What should I do if I think I encountered a student loan scam?

There are several organizations and resources to assist borrowers who have concerns about their student loans. While many of these resources and organizations are legitimate and can be helpful, it is important to be wary of student loan debt relief companies that charge fees to do what you can do for free. The following sections provide contact information for other organizations:

Alternatively, you might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with the U.S. Department of Education, the office of Federal Student Aid, and loan servicers, and never reveal your personal information or account password to anyone.

Watch out for these red flags:

Promises of immediate loan forgiveness or cancellation. Student loan debt relief companies have no ability to forgive your student loans. Any changes to federal student loan repayment plans will be made through one of the government’s official loan servicers.
Asks you to sign a power of attorney form.
High up-front fees to apply to loan repayment programs.
Pressures you into acting immediately by instilling a sense of urgency. May use phrases like “Call Now!” “Get Your Student Loans Forgiven Now!” “Guaranteed Results!” or “Savings Plan Available for a Limited Time Only!”
Statements about relationships with the government.
Requests for a student’s Federal Student Aid username and password for services (The U.S. Department of Education advises borrowers against sharing their account log-in credentials).

If you think you have been scammed by a student loan debt relief company, you should contact your loan servicer and revoke any power of attorney or third-party authorization forms, change your FSA ID password, check with your servicer about recent account activity and contact your bank or credit card company to stop payments. You should also immediately report the company to the Minnesota Attorney General’s Office by filing a consumer complaint.

Additional information on student loan debt relief scams can be found here.

If you are having trouble with a student loan debt relief company, a lender, a debt collector, or a student loan servicer, the Minnesota Attorney General’s Office may be able to help.

There are several ways to contact our office:

First, you may telephone our office at (651) 296-3353 (Twin Cities Calling Area) or (800) 657-3787 (Outside the Twin Cities). Our phones are answered by trained consumer specialists who may be able to answer your questions or point you in the right direction.

Second, you may write a letter to the Office. Your letter should provide the name and contact information of the company you are having trouble with, an explanation of what the problem is, and pertinent information about the amount of your loan and the nature of your problem. You may send this letter to our office at the following address:

Office of Minnesota Attorney General Keith Ellison
445 Minnesota Street, Suite 1400
St. Paul, MN 55101

Third, you may fill out the Consumer Assistance Request Form and either submit it online or mail it to our office.