University of South Florida undergraduates prepare to be called to the commencement stage in December 2016, a year when the average student debt upon graduating was $24,461 for Florida students. Student loan repayments restart in October after a 42-month pause because of the pandemic, but many borrowers can access plans that reduce payments or keep interest from piling up. [ LUIS SANTANA | Times (2016) ]

It’s been a long time — 42 months to be precise — since federal student loan payments have been due, and a lot has changed. Your loan servicer may have changed in the interim, meaning you may need to make a new account and set up automatic payments again. There’s also a new repayment plan that could reduce your payments and offer new protections for missed payments as well as loan forgiveness for some borrowers.

Interest began accruing again Sept. 1 and the first payments come due in October. That leaves just weeks to tie up loose ends for the 2.7 million Floridians who owe federal student debt.

It’s a lot to navigate at once, so here’s what you need to know.

What is the new SAVE Plan and how does it work?

The Saving on A Valuable Education (SAVE) Plan rolled out by the Biden administration this summer could reduce monthly payments and long-run debt for most borrowers.

It’s an income-driven repayment plan, meaning that monthly payments scale to how much you make and your family size. The plan replaces the Revised Pay As You Earn (REPAYE) Plan and borrowers previously on that plan will automatically get the benefits of the program. More than 4 million borrowers have already enrolled as of Sept. 5, according to the Department of Education.

The new plan should offer the lowest monthly payments for most borrowers with relatively few drawbacks, the department said.

The SAVE Plan increases the income cutoff under which no payments are due.You wouldn’t have to make payments if you fall below 225% of the poverty line.That’s up from150%. Itmeans an individual making under $32,800 per year would be exempt from any mandatory monthly payments. That threshold increases for larger households, increasing to $67,500 for a family of four.

“There is no cookie-cutter answer for borrowers,” said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit that provides support for student borrowers.

For example, someone with a high income and a low loan balance might paymore per month under the SAVE Plan compared to a balance-driven monthly payment. For each borrower, the best plan will depend on a wide range of factors like income, loan amount and family size, she said.

Borrowers can see their federal student loan repayments under different plans using thedepartment’s loan simulator.

The plan would also mitigate runaway loan balances by capping the interest that the loan accrues each month. As long as you make your monthly payment, any leftover interest is zeroed out at the end of the month under the SAVE Plan. The Federal Student Aid website offers this example: If $50 in interest accumulates each month and you have a $30 calculated monthly payment, the remaining $20 would not be charged.

Borrowers need to recertify their income every year to stay on the SAVE Plan. The plan is unavailableto those with parent PLUS loans.

What happens if I miss a payment?

Income-driven plans are designed to find a manageable monthly payment option. But if you find yourself unable to make a payment, there are some new protections for borrowers through Sept. 30, 2024.

During the 12-month repayment “on ramp” you won’t be reported to credit reporting agencies or sent to collections. Interest will add up on missed payments, but the program should help borrowers stave off the worst consequences of a missed payment.

Miss too many payments and you’ll find yourself in default — meaning that you’re at least 270 days behind on payments. Defaulting can have implications for your credit score and for yourability to access certain federal programs, like future student aid.

Borrowers who defaultedbefore payments were paused will get a one-shot chance to restore their good standing through the department’s Fresh Start program. Toenroll, borrowers can contact a Federal Student Aid representative at From there, your loan will be transferred to a loan servicer who can help put you on an income-driven repayment plan.

What you shouldn’t do is ignore your loans, hoping they’ll go away. Federal student loans aren’t like credit card or private loan debt, Mayotte said.

The Department of Education has powers that other lenders don’t, including the ability to garnishwages or deduct payments from your federal tax return without taking you to court. If monthly payments under the SAVE Plan are still too much, Mayotte suggests borrowers apply for temporary forbearance or deferment on their loans.

What happened to loan forgiveness?

In June, the U.S. Supreme Court blocked the Biden administration’s plan to cancel roughly $400 billion worth of federal student debt. In response, Biden announced that the U.S. secretary of education was exploring other avenues for debt relief. But don’t hold your breath — the process could take at least a year and would likely face pushback from Republican lawmakers.

The safe assumption for now is that you’re on the hook for the whole loan balance, Mayotte said. In that scenario, borrowers should think about minimizing their total balance rather than looking for the lowest possible monthly payment right now. That might mean paying more now to reduce future interest.

In July, the Biden administration also moved forward with a plan to cancel roughly $39 billion in student debt by giving borrowers credit for past periods of repayment when they may not have been aware of all their options. About 800,000 borrowers will get that relief.

In Florida, that means $3 billion in loans discharged for nearly 57,000 borrowers. The process of notifying borrowers started in July and will continue until the end of the year. Even if your balance isn’t completely nullified, the correction may push you closer to the finish line for forgiveness.

How will the new policies impact my tax return?

Finding the right loan repayment program is important, but even the federal loan simulator doesn’t capture all the intricacies of the decision. Married borrowers who file taxes jointly may want to consider filing separately to access the lowest possible payments under the SAVE Plan. But that decision isn’t right for everyone, since families can generally qualify for a lower tax bracket by filing jointly.

Loan forgiveness may have tax implications going forward. Student loan forgiveness is counted toward taxable annual income, which can add up if you’ve had a substantial balance erased. The 2021 American Rescue Plan Act temporarily exempted student loan forgiveness from federal taxes through 2025, but there’s no promise that exemption will be extended, Mayotte said.

Borrowers should consider consulting an accountant or tax expert before selecting a plan.

Should I trust companies who say they can help reduce my loans?

Generally, no.

Navigating student loans can be overwhelming, and scammers can take advantage of your confusion if you’re not careful, said Jack Wallace, director of governmental and lender relations at Yrefy — a firm that helps refinance private student loans.

Be wary of companies claiming that they will manage your loans for an up-front fee, Wallace said. He also warned that some unscrupulous companies may try to sell your personal information on the black market.

If you think you’ve been contacted by a scammer, get in touch with your loan servicer and check out the business with the Better Business Bureau. You can also report scammers to the Florida attorney general.

Ian Hodgson is an education data reporter for the Tampa Bay Times, working in partnership with Open Campus.

Education data reporter for The Tampa Bay Times in partnership with Open Campus.