If you have federal student loans, two important benefits end today: student loan repayment as you go and the Fresh Start program.

Federal student loan payments were suspended from March 2020 through October 2023 in response to the pandemic. Over the last year, borrowers received additional benefits that were intended to facilitate the return to active student loan repayment.

These benefits expire on September 30. Starting in October, missing payments can lead to default, debt collection and damage to your credit report. If your loans are in disrepute for late repayments, you have until the end of the day on Monday to apply for the Fresh Start program to recover your unpaid loans.

Here’s what will change from October 1.

Missed student loan payments will count against you

Because student loan payments have been paused for more than three years, the Department of Education has offered borrowers a one-year grace period to help them prepare to make monthly student loan payments again. While payments were still due at that time, if you couldn’t make your payments each month, your loans weren’t moved into delinquency or default. Loan servicers have also been instructed not to report missed payments to credit bureaus during this period.

Interest continued to accrue, and skipping payments meant you weren’t making any progress toward getting out of debt or qualifying for a loan forgiveness program like Public Service Loan Forgiveness.

From October 1, this will change. Late payments can now be reported to credit bureaus, which could damage your credit score. If your payments are 90 days late, your loans will become delinquent, and if you miss 270 days of payments, your loans will be considered in default. Defaulting on student loans can have many negative consequences. Your debt may go to collections, and the government may try to collect payments by garnishing your wages, tax refunds and Social Security benefits.

“Borrowers who default on their federal student loans may face more serious consequences once the grace period ends,” said student loan attorney Adam Minsky. “This may include late fees, negative credit reports and defaults.”

Exception: If you are enrolled in the Saving in a Valuable Education repayment plan, your student loan payments will remain on hold until the court decides the fate of this debt relief program.

The Fresh Start program will be closed

The Fresh Start program provides borrowers with an easy way to get their student loan payments back. Simply register for the program online or by phone by September 30 to get your loans back in good standing.

Once you apply for Fresh Start, the default will be removed from your credit report and you will once again have access to income-driven repayment plans, deferment, forbearance and forgiveness programs.

The government also automatically granted certain benefits to borrowers who defaulted over the past year, such as a halt to collection attempts and restoration of access to their Federal Student Aid accounts. These benefits will also cease to apply to outstanding loans if you decide not to apply for Fresh Start.

How to manage student loans in the future

It’s a confusing time to have federal student loans now. Not only are COVID-era benefits ending, but your access to income-driven repayment plans has also been restricted indefinitely.

You can still take steps to manage your education debt and avoid default:

• Check the status of your student loan: Start by logging into your Federal Student Aid account to check your loan balances, interest rates, and repayment status. You can also see who your loan servicers are in your account.
• Sign up for automatic payments: If you can afford monthly payments, consider using an autopay service. This way you won’t miss any bills and get 0.25% discount on your interest rate.
• Discuss your options with your loan servicer: If you can’t afford your payments, call your mortgage advisor to talk about your options, preferably before you miss any bills. While access to IDR plans is currently limited, a loan servicer may place student loans in interest-free forbearance.
• Get Outstanding Loans: If you have outstanding loans, please consider applying for Fresh Start by the close of business on September 30. If you miss this deadline, consider consolidation or rehabilitation to get them back on track. Consolidation offers a faster route to getting out of default, but rehab can remove the default record from your credit report.
• Check out the PSLF buyout program: The PSLF program offers loan forgiveness after ten years of public service. If you are a teacher or public service employee who has already worked for ten years, you may be able to “redeem” the months you spent in deferment or forbearance to meet the “120 qualifying payments” requirement under PSLF. More information on PSLF redemption options can be found here.