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Resumption of Student Loan Interest: Implications for Borrowers Explained

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Resumption of Student Loan Interest: What Borrowers Need to Know

After a pause since March 2020, the interest on federal student loans has started accruing again, signaling changes for borrowers. During the pause, the interest rate on most government-owned education debt was set to zero, and borrowers faced no penalties for non-payment. However, borrowers will now see their loans return to pre-pandemic rates, typically ranging from 3% to 7%. It's important to note that the interest rates on federal student loans are fixed once disbursed but vary depending on the loan's disbursement date.

Adjusting to Loan Payments

As borrowers face the reality of reintegrating student loan payments into their budgets, it is crucial to plan accordingly. Betsy Mayotte, president of The Institute of Student Loan Advisors, highlights that millions of federal student loan borrowers will need to figure out how to accommodate these payments once again. The typical monthly student loan bill is around $350, so it's essential to assess financial circumstances and make necessary adjustments.

Impact of the Pause on Borrowers

The pause on student loan payments has provided significant relief for borrowers. An analysis by higher education expert Mark Kantrowitz reveals that nearly all eligible borrowers took advantage of the pause, with less than 1% continuing to make payments on their education debt. This policy has potentially saved the average borrower around $15,000 in student loan payments, including approximately $5,000 in interest charges.

Checking Interest Rates and Available Options

Student loan borrowers can check their interest rates at Studentaid.gov or consult their loan servicer for specific details. It's important to note that some borrowers may still benefit from an interest break. This includes those with unsubsidized undergraduate loans in an in-school deferment or grace period. Additionally, borrowers facing unemployment or other economic hardships can explore deferment options that may temporarily halt the accrual of interest. In conclusion, the resumption of student loan interest brings changes for borrowers who must now navigate the return to pre-pandemic rates. It is crucial for borrowers to assess their financial situations, adjust their budgets accordingly, and explore available options such as deferments. While the pause on student loan payments provided temporary relief, borrowers should now plan strategically to manage their student loan obligations effectively.

Implications for New Businesses

The resumption of federal student loan interest presents a "hot take" for new businesses, particularly those in financial services or education sectors.

Financial Planning Services

With borrowers needing to reintegrate student loan payments into their budgets, there's a potential market for businesses offering financial planning services. These businesses could provide guidance on budgeting and debt management, helping borrowers navigate this transition.
Education and Training Services
The resumption of interest could also impact businesses offering education and training services. With the added financial burden of loan repayments, potential students may reconsider further education or training, affecting these businesses.


In conclusion, the resumption of student loan interest could have significant implications for new businesses in the financial and education sectors. It emphasizes the potential market for financial planning services and the potential impact on education and training providers. As the landscape of student loans continues to evolve, new businesses can leverage these insights to identify opportunities and navigate challenges.
Story First Published at: https://www.cnbc.com/2023/09/01/student-loan-interest-resumes-today.html
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