Repayment for federal student loans is set to resume in October. This, following the Supreme Court’s decision on Biden’s one-time student debt relief plan, which would have canceled up to $20,000 worth of federal loans for eligible borrowers.

However, a lot can change in three years — and that’s exactly what happened. A new TransUnion study found that millions of borrowers have taken on more financial responsibilities since payments were first paused in 2020. Now, as repayment approaches, many borrowers are in for a financial shakeup.

Millions to experience “shock” as repayment for federal student loans resumes this October

According to a new TransUnion study, millions of student loan borrowers have taken on more debt since payments for federal student loans were first paused during the height of the pandemic. However, this should come as no surprise since consumers across the board have been relying more heavily on credit to cope with rising costs amid high inflation.

Currently, 26.8 million Americans have federal student loan debt, many of whom will face student loan repayment for the first time in over three years. Although the Department of Education has put several provisions in place to help borrowers, including the new SAVE plan and a temporary “on-ramp” to prevent servicers from reporting missed payments for up to 12 months, the added expense will still be challenging for many.

“These borrowers will experience a payment shock as they attempt to recalibrate their monthly budgets to accommodate this new payment,” TransUnion’s study read.

Over half of federal student loan borrowers took on new bank credit cards, while loans were in administrative forbearance. Meanwhile, over a third took on auto loans, as shown in the chart below.

Estimated student loan payments by generation

Student loan debt is a problem typically associated with younger individuals, but payment resumption will affect Americans across five generations. The silent generation, baby boomers and Gen Xers will feel the pinch more so than others, as they account for the majority of borrowers with monthly payments of $500 and over.

Estimated federal student loan monthly payment Silent Baby boomers Gen X Millennials Gen Z
Percentage with payments of $200 and under 43% 40% 41% 47% 64%
Percentage with payments of $500 or more 30% 30% 29% 20% 5%

Source: TransUnion

How to get student loan debt relief

Student loan payments have been on the back burner over the last few years. However, avoiding them until the last minute won’t make them go away.

“Consumers should begin assessing their monthly budgets as soon as possible and begin making adjustments to accommodate the new payments,” Liz Pagel, senior vice president and consumer lending leader at TransUnion, says.

“Despite the 12 month ‘runway’ before missed payments get reported to credit bureaus, it’s in the best interest of consumers to begin payments right away as interest will begin accruing,” she adds.

If you foresee having trouble making payments, these solutions could help you get the financial relief you need:

  • Apply to an income-driven repayment plan. These plans adjust your monthly payments based on your household size and income. To apply, simply visit, log into your account and follow the instructions for the application. In some cases, your payment could be as low as $0.
  • See if you qualify for forgiveness. While mass student loan forgiveness is off the table for now, depending on where you work, you could get a portion of your federal student loan balance forgiven. This is thanks to the several forgiveness programs the Department of Education offers, including the public service loan forgiveness program and the teacher loan forgiveness program.
  • Consolidation. When you consolidate your federal student loans, you basically bundle up multiple loans into one, with a single payment and interest rate. Consolidation also allows you to extend the length of your repayment, which can lower your monthly bill. That said, this will result in more interest paid over time. To apply for federal student loan consolidation, log into and fill out the application.
  • Check if refinancing is right for you. It’s almost never advisable to refinance your federal student loans. Refinanced federal loans become private student loans, so you lose access to the benefits and protections offered by federal loans. However, if you have excellent credit, you could qualify for a lower interest rate than the one you currently have or extend your repayment term. Both of these options can result in lower monthly payments. However, the latter will result in more interest paid over the life of the loan.

The bottom line

Repayment for federal student loans will restart this October. Make sure to contact your loan servicer — if you haven’t already — to know exactly what you’re in for regarding your payment amount and due date.

Once you have this information, you can determine how to best adjust your budget to accommodate this new expense. The most important thing is to be proactive and remember that relief options are available if you’re struggling.