DES MOINES, Iowa — On Friday, the federal pause on student loan repayments ends, three years after it began.
For countless Iowans, the pause was a welcome relief from the hardships of the COVID-19 pandemic.
President Joe Biden hoped to expand debt relief for many Americans through a $400 billion plan to cancel or reduce student loan debt.
With that ruling, the federal pause on payments would also come to an end 60 days following that decision, which is Friday.
Throughout the pause, not only were payments not required, but interest was also halted.
Now, interest will start once again on Friday, with payments starting in October.
Student loan financial experts say borrowers should be prepared by making sure they know who their loan servicer is.
"Their interest is already starting to accrue, and their first payment will be due in October, so they need to get ready for that,” said Steven McCullough, president and CEO of ISL Education Lending. “Now the most important thing they can do is contact their loan servicer."
Borrowers who are unsure of their loan servicer should go to studentaid.gov prior starting to repayment.
McCullough also said there are harsh consequences for those who choose not to pay student loans back.
"You really do have to make payment," McCullough said. "If you don't make your payments and you haven't worked out a deal with your servicer, then you will become delinquent, they will call collection agencies, they can even withhold your income tax returns and garnish your wages."
Shortly after the SCOTUS decision, the Biden Administration did announce the Saving on A Valuable Education (SAVE) Plan, which they said “will transform student loan payments.”
The SAVE Plan calculates each borrower's monthly payment based on income and family size. For example, someone who makes only $15 an hour would have a $0 monthly payment.
With the SAVE plan, anyone who makes their monthly payment on time will not have to pay their unpaid interest.
For example, if a borrower has $50 in interest that accumulates each month and their payment is $30 per month, the remaining $20 would not be charged, so long as they make that original $30 monthly payment.