BUFFALO, N.Y. — The U.S. Department of Education’s COVID-19 relief for student loans ended this year and borrowers will have to begin paying those loans back this month. Regular interest rates on the loans have also resumed.
New York Attorney General Letitia James is offering tips to borrowers on how to manage their loans and to be aware of potential scammers.
“With federal student loan payments resuming in October, there is a lot of anxiety and confusion from students, borrowers, and families,” said Attorney General James in a release. “To help address this situation, I encourage New Yorkers to follow these tips to better manage their federal student loans and take advantage of programs meant to alleviate the burdens of student debt. I also urge borrowers to be wary of scammers claiming to help relieve student debt. Anyone who believes they have been a victim of a student debt relief scam should contact my office immediately.”
The Attorney General's office (OAG) recommends these tips when repaying your loan.
- Make sure your contact information is updated on your loan servicer’s website.
- Be aware that some student loans have switched to new servicers during the payment pause. If you’re not sure who your servicer is, visit the U.S. Department of Education’s (DOE) Federal Student Aid (FSA) website for more information.
- Update or set up your FSA account.
- Studentaid.gov is the DOE website for federal student loans, and you can access information about your federal student loans as well as apply for repayment plans, consolidation of your federal student loans, and find further information on repayment. If you don’t have an account, you can apply for an FSA ID online.
- Get an estimate of your upcoming payment amount, interest rate, and due date from your loan servicer.
- While you will receive a billing statement at least 21 days before your payment is due, you should contact your loan servicer online or by phone to get an estimate of your upcoming payment amount, which may have changed since you last paid.
- Your interest rate may have also changed if, for instance, you consolidated your loans.
- Check out DOE’s Loan Simulator to review your repayment plan options.
- Check if you are eligible for the Biden Administration’s new SAVE Plan. The repayment plan will cut monthly payments to $0 for millions of borrowers making $32,800 or less, or $67,500 for a family of four, and save all other borrowers at least $1,000 per year. Borrowers who are already signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in the SAVE plan. More information on the SAVE Plan can be found on FSA’s website.
- Research an Income-Driven Repayment (IDR) Plan if you believe that your payments will be too high.
- IDR plans can help provide a lower monthly payment amount depending on your income and family size. Depending on your circumstances, IDR payments can be as low as $0.
- More information on IDR Plans can be found online on FSA’s website.
- Sign up for auto-debit payments.
- Auto-debit payments mean your student loan bill is paid automatically from your bank account, helping ensure you never miss a payment. If you have Direct Loans, you may also get a 0.25% interest rate reduction if you sign up for auto-debit.
- For many borrowers, auto-debit payments will NOT restart automatically and most borrowers will need to confirm their auto-debit enrollment by opting-in even if they were previously signed up for auto-debit. More information can be found online on FSA’s website.
To check if your loans are public or private, visit FSA’s online page about the difference between public and private loans or call 1-800-4-FED-AID.
The OAG is also warning borrowers to be aware of scams. They recommend that you do not give any personal information or usernames and passwords to anyone over the phone, unless you initiated the call. They also say to watch out for scammers who say they can lower your student loan repayment for a fee. Many of those services your loan servicer already provides for free, or you can do it your yourself.
For more information:
Federal Student Aid
New York State Attorney General's Office
US Department of Education