Federal student loan repayments resuming: Here's everything you need to know

MINNEAPOLIS (FOX 9) - Interest on federal loans started accruing again earlier this month, and by now, borrowers should have received a notice the first payment is due Oct. 1.

Certified financial planner with Cahill Financial Advisors Andy Tate, says it's time to get prepared.

"First and foremost, organize. The more organized you are, the more protected you’ll be," says Tate. "Look at old receipts of old payments, identify your lenders, who they are? A lot of the service providers have changed, so you need to make sure you make the phone call. Who is now in charge of my loan? What type of loan do I have? Gather some data on that loan."

What if a borrower knows they can’t afford a payment? Tate points out there are a couple of options:

• There’s a process called forbearance, which if you are going through an economic hardship, you can delay payments for up to 12 months.
• Deferment is a situation where your interest will still accrue, but you won’t have to make payments.
• Explore private loans, but ask your lender about any possible stipulations if you go that route.
• The SAVE Program. You will not owe loan payments if you are a single borrower, earning $32,800 or less, or a family of four earning $67,500 or less.

"The route to go now is to use the new SAVE program, that’s what the Biden administration rolled out. It’s an income-based program, so you are going to submit your income, plus your family size, and it will determine what your payments will be," says Tate. "If you make those payments, your interest will no longer accrue. So, your balance will stay the same, but interest will not be added on top of it."

What if you don’t plan and simply miss a payment?

"Interesting situation with that. The U.S. government has said there’s a ramp-up period. They're going to give you 12 months and not report you as delinquent, but that doesn’t mean you are free and clear," explains Tate. "The reporting agencies or credit agencies may actually decrease your credit score based on your missing payments."

Tate further explains if borrowers have missed payments in the past, there are some programs that can help them catch up.

"I think that’s a bigger piece of it. The key to the SAVE program is making religious payments. Don’t miss, you need to make sure you are making those payments."

A few other key reminders from Tate include:

• If you auto-enrolled in the past, you have to re-enroll again.
• Tax time will be another time to review all your information because, for example, a married couple filing separately could actually reduce their payments.
• Be aware of scams. As new programs roll out, scammers often show up.
• Verify the information given to you with the federal calculators available, such as the one on Studentaid.gov.

"Be prepared for some headaches, it’s not going to be a smooth rollout," says Tate. "I think there are 4 million people that have already gone through this in the last few weeks, and the system will be tested. So getting an early start on this is wise."

On Wednesday, Sept. 27, at 3 p.m. on fox9.com and the FOX Local app, we will host a Q&A with a student loan expert. If you have a question you want answered, email us at fox9news@fox.com.