Student Loan 2023 Changes: What You Need to Know as a Student

Student loan 2023 changes: The past few years have brought major changes to federal student loans that affect millions of student borrowers like you.

The year 2023 has seen more changes that could impact your student loans and financial situation as a student.

Staying up-to-date on the latest student loan news is crucial to making informed decisions about paying for college and managing student loan debt.

Student Loan 2023 Changes

Here are the significant changes to student loans in 2023, including loan interest and updates:

1. Student Loan Pause Extended Through 2023

One of the most impactful student loan changes in 2022 was the extension of the federal student loan payment pause.

The pause was originally set to expire on May 1, 2022, but it was pushed to August 31, 2022, and then extended to December 31, 2023.

If you have federal student loans, you are not required to make payments, and interest will only accrue on your loans on January 1, 2024.

For you as a student, this provides continued financial relief and time to prepare for when payments restart. Take advantage of the pause to get your finances in order.

2. Student Loan Forgiveness Application Open

In August 2022, the Biden administration announced a one-time debt relief program that makes you eligible to receive up to $10,000 in federal student loan forgiveness.

You are eligible if you meet income requirements—an application for loan forgiveness opened in October 2022.

As a student borrower, you may qualify for this forgiveness if your federal student loans were disbursed before July 2022 and your income falls under the caps based on your tax filing status.

This program represents a major opportunity to receive loan forgiveness while still in school. Act quickly to submit an application before the deadline in December 2023.

3. Interest Rates Rising for New Federal Loans

While you’re protected from interest while loans are paused, new federal student loans issued for the 2023-2024 school year will see higher interest rates.

Rates for new undergraduate federal loans have increased to 4.99% from 4.99% last year.

This means if you need to take out additional federal loans for college, expect increased costs over the lifetime of your loan due to accruing interest.

Consider options like scholarships, grants, and work-study programs to help minimize new loans at higher rates. Also, discuss a lower-cost college option with your family.

4. Changes to Income-Driven Repayment Plans Coming

Major proposed changes to income-driven repayment (IDR) plans for federal loans could go into effect in 2023.

The Biden administration has proposed a new IDR plan to lower monthly payments.

This plan will also simplify repayment and provide loan forgiveness after ten years of payments for borrowers with original loan balances of $12,000 or less.

The new IDR plan isn’t finalized yet, but it could benefit you as a student when you eventually enter repayment.

Make sure to research the new IDR plan options when they are announced so you can enroll in the best plan for your situation after graduating.

An affordable payment plan will be key to avoiding delinquency or default.

Read Also: Best Student Loan Lenders in 2023

5. Pell Grant Increases to Provide More Aid

As a student relying on financial aid, here’s some good news: the maximum Pell Grant award has increased to $6,895 for 2023-2024, up by $400 from 2022-2023.

The higher Pell Grant award will enable hundreds of thousands of lower-income students to receive more grant aid that doesn’t need to be repaid.

Check with your college financial aid office to see how the increased Pell Grant award will impact the amount you’re eligible to receive next year.

Just an extra few hundred dollars could make a difference in covering your tuition, books, and other education expenses as you work towards your degree.

What You Should Do Now

With so much in flux, it’s important to take action to make sure you understand how these student loan changes impact your situation.

Here are some steps to take:

Review your student loans on StudentAid.gov and understand your current balance, loan types, and interest rates.
If you qualify, apply for one-time student loan debt relief before the December 2023 deadline.
Contact your college financial aid office to see if you can receive an increased Pell Grant award.
Research new IDR plan proposals so you know your repayment options when the pause ends.
Limit additional borrowing and find other ways to pay for rising college costs besides loans.
Create a budget to manage expenses and prepare for student loan payments restarting.
Stay up-to-date on further changes by signing up for alerts on the Federal Student Aid website.

Final Thought

The flurry of student loan policy changes can be confusing to stay on top of as a borrower.

However, being an informed borrower will ensure you can maximize debt relief opportunities and manage payments.

With a little preparation, you can graduate college poised for success.