The saga around US student loans continues. The US government instituted a three-year payment pause due to the COVID-19 pandemic. Now, the US Department of Education has announced that repayments will be reinstated soon.

“Student loan interest will resume starting on September 1, 2023, and payments will be due starting in October. We will notify borrowers well before payments restart,” the Department of Education said in a statement sent to CNN.

Almost 44 million Americans have a student loan, adding up to a combined debt of $1.6 trillion. They received a respite in 2020 under Donald Trump’s administration, and the respite was subsequently extended several times under Joe Biden’s administration.

Biden even took things one step further, unveiling a plan one year ago that would provide up to $20,000 in one-time debt relief. This would only apply to those with an income under $125,000 (or $250,000 if married and filing a joint tax return) in either 2020 or 2021.

However, legal challenges were quickly brought against the initiative by the fall. Two federal courts suspended relief, the Biden administration appealed those decisions. Now, the matter is at the Supreme Court.

But until that decision is made, payments are due — and borrowers are encouraged to prepare themselves.

Student debt is back on the campus menu

Given the upcoming changes, borrowers are encouraged to prepare ahead of time to avoid complications. Up to 76% of borrowers are estimated to potentially miss their first required federal student loan payment. Many will have to look for student loan consolidation or other funding schemes, and a large proportion is at risk of default.

Critics of the decision to resume payments say that there’s still not enough information coming from the US Department of Education, and people who have moved address or are not regularly checking the internet may not realize what is happening. Aissa Canchola Bañez, a senior adviser at the Student Borrower Protection Center comments:

“I think there are lots of questions we have that the [Department of Education] really needs to put out guidance to their servicers on, like a firm timeline and what to expect so that borrowers can can plan accordingly,” Canchola Bañez told ABC.

“If servicers have the chance to do whatever they want, that’s going to be even more confusing for, let’s say, a borrower who has multiple services or a married couple with two different servicers,” she said.

The Department of Education said they will be issuing more concrete timing guidance in the upcoming months to ensure students are well aware of their payment deadlines​. Borrowers will receive their bill statements from their loan servicer a few weeks before they are due, with the exact due date varying depending on individual loan servicers​​.

Furthermore, the Department of Education said it is implementing a new income-driven repayment plan, described as “the first true student loan safety net in this country.”

This will allow some Americans (particularly those with lower income) to make lower monthly payments and have their debt forgiven after a certain number of payments. However, the availability date for this new plan is still unclear​.

Furthermore, restarting payments for some 44 million federal student loan borrowers is a monumental and unprecedented task. Many people will undoubtedly be confused about how much they should pay and when they should pay it.

Millions of borrowers will have a different servicer handling their student loans and/or have moved state. Furthermore, according to data from the Consumer Financial Protection Bureau, many students were already behind on their bills when the pandemic struck, which will make it even more difficult to catch up. Even if the forgiveness measure passes (which is a big ‘if’), it will be months before the forgiveness comes in.

US student loans have surged in the past 20 years. Students who complete a bachelor’s degree accrue around $30,000 in debt, on average. The costs for graduate courses are much higher, and research suggests that increasing borrowing limits drives tuition increases.

In the coming months, borrowers will face a challenging transition. But this period could also serve as a pivotal moment for policy reform. The student loan crisis has been a long-standing issue, but the pandemic has brought it into sharp relief. As we move towards a post-pandemic world, this could be an opportunity to reimagine a system that is fair, affordable, and beneficial to all.