What student loan borrowers should know about the 12-month start-up period

A woman plans a budget.

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Do I need to do anything to apply for relief?

According to the U.S. Department of Education, borrowers are not required to enroll in the intake phase.

If your loans were eligible for the payment holiday during the pandemic, which primarily includes those in the Direct program, then you are also eligible for this type of payment holiday.

Nonqualified loans include private student loans and commercially held federal family education loans.

Will my debts continue to accrue interest?

Yes. Federal student loan interest began accruing September 1.

Unlike during the pandemic-related pause on federal student loans, when interest rates were set to zero, your debt will continue to grow at pre-COVID rates next year. If you forego payments or only make partial payments during the training period, this means you will likely have a larger bill in a year.

For this reason, Scott BuchananExecutive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said he hopes borrowers don’t think this is just another payment pause.

“There is a fundamental difference here, which is that interest now accrues,” Buchanan said.

Are there any consequences for non-payment?

Experts assume that there will be hardly any consequences other than interest accrual if no payments are made during the switch-on phase. However, as with all student loans, caution is advised. One borrower previously told CNBC that her account was placed on delinquent status because she didn’t make her October payment.

Still, the Department of Education says it will not report your missed payments during this period to the credit bureaus.

Borrowers should also be protected from debt collection activities, including garnishment of their wages or pension benefits, said higher education expert Mark Kantrowitz.

Should I make payments or not?

What happens if my service technician makes a mistake?

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