Your student loan payments are about to start. Here’s what you should know

Consumer advocates say many borrowers will likely have difficulty readjusting to their student loan payments.

“Even if the risks of the virus have diminished, the financial fallout has not,” Persis Yu, deputy executive director at the Student Borrower Protection Center, previously told CNBC.

The Consumer Financial Protection Bureau has too to caution Nearly 1 in 5 student loan borrowers have risk factors that could lead them to have difficulty paying their bills.

To combat these concerns, the Biden administration is implementing a 12-month plan “On the slope” to pay offduring which borrowers will be protected from the worst consequences of default.

Specifically, for a year, borrowers’ late payments should not be reported to credit bureaus and they will not face normal collection activity, including wages and retirement benefits, higher education expert Mark Kantrowitz said.

Several lenders that administer federal student loans for the government — including Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State – I stopped doing this during the pandemic-era pause.

As many as possible 4 in 10 Student loan borrowers will be transferred to a different company by the fall, according to the CFPB.

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Those served by the Granite State company will now be with EdFinancial Services, said Kantrowitz, who has been tracking the changes. Great Lakes Higher Education accounts must be managed by Nelnet going forward, and Navient borrowers will be transferred to Maximus Federal Services/Aidvantage.

Borrowers can check to see if they have a new service in StudentAid.gov.

At the same time, he said borrowers shouldn’t do too much during the servicing swap Scott Buchananexecutive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Some will need to create an updated online account with their new company. “But the communications they received would have told them if they needed to take that step,” he added.

If you’re enrolled in automatic payments with your provider, which typically results in a small discount on your interest rate, you may need to re-enroll, Kantrowitz said.

You’ll also need to make sure your new provider has your most up-to-date contact information, as those details may have changed during the Covid pandemic, he said.

If you’re enrolled in the same payment plan you were on before the pause went into effect, your monthly bill may not change, Kantrowitz said. Average payment is about $350 per month.

However, if you sign up for Income-based repayment planyour monthly bill may be different if your income is lower or higher than it was in March 2020. IDR plans base your payment on a share of your discretionary earnings.

Also: If you sign up for the Biden administration’s new SAVE plan, your monthly payment should be lower, at least for the time being. This plan reduces people’s commitment to just 5% of discretionary income, the smallest amount yet. (Some of the program’s benefits will be in place by the time payments restart, but others won’t start until next summer, due to the timeline of regulatory changes.)

To determine how much your monthly bill will be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org