For the past few years, many doctors, like millions of other Americans, have benefited from the temporary suspension of federal student loan payments due to the COVID-19 pandemic. This month, federal student loan payments resumed, meaning those millions of student loan borrowers are now required to make payments.

Do you have federal student loans? Are you ready to make payments?

Here’s what you need to know about updates to federal student loan policies and programs and strategies for managing your loans.

New IDR Plan & On-Ramp to Payments: Federal Student Loan Changes

According to ConsumerFinance.gov, about 1 in 5 student loan borrowers have risk factors that indicate that they may struggle when payments resume.

As the forbearance period drew to a close, the Department of Education announced an on-ramp approach to repayment and a new income-driven repayment plan to help borrowers that may be at risk.

Student Loan On-Ramp

The sudden resumption of payments could be financially overwhelming for many individuals, so the on-ramp is designed to gradually reintegrate borrowers into the rhythm of student loan payments.

Under this provision, borrowers will have a one-year grace period for missed payments from October 1, 2023 to Sept. 30, 2024. Those who have missed or late payments won’t be reported to credit reporting agencies, be considered in default, or be sent to collection agencies, but interest will still accrue during this time.

If you are considering whether you should utilize this on-ramp, know that The White House recommends that if borrowers can pay on their loans, they should. The on-ramp is meant to help borrowers who are unable to make their payments and need time to adjust to the new expense.

New IDR Plan

The new IDR plan, Saving on a Valuable Education (SAVE), is the most affordable plan to date and could help doctors by:

• Raising the amount of income that is considered non-discretionary income. (This is particularly useful for residents and trainees).
• Not charging borrowers with unpaid monthly interest, so no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
• Married borrowers will not be required to include their spouse’s income in their payment calculation, if they file taxes separately.

Transitioning To Student Loan Repayment

The transition from forbearance to loan repayment can be complex, but borrowers can take several proactive steps to ease the process:

• Understand your loans: Understand the specifics of your loan, such as interest rates, repayment options, and potential benefits or programs available to you.
• Assess financial situation: Evaluate your current financial standing to determine the feasibility of the repayment terms.
• Consider repayment plans: Explore the different repayment plans offered by the Department of Education which can help adjust your payments based on your income level.
• Seek professional advice: Navigating student loans can be complex, especially for doctors who may have substantial debt loads. Consider consulting with a student loan expert who can provide personalized guidance based on your unique financial situation.

Managing Your Student Loans

Navigating the transition from forbearance to loan repayment requires proactive steps. Panacea Financial is here to help every step of the way with Student Loan Refinancing and Student Loan Consultations all built just for doctors. Learn more and take advantage of PAMED exclusive discounts at panaceafinancial.com.