Millions of student-loan borrowers' balances are now starting to grow again after over 3 years

• Interest started to grow on federal borrowers' student-loan balances again on Friday.
• This signified the end of the student-loan payment pause that began in March 2020.

After over three years of relief, student-loan borrowers' balances are once again starting to grow.

On Friday, interest was turned back on for federal borrowers' accounts, marking the end of the student-loan payment pause that began in March 2020. First implemented by former President Donald Trump, the payment pause was intended to give borrowers financial relief during the pandemic. It has since been extended numerous times by President Joe Biden, but the bill to raise the debt ceiling signed into law in the beginning of June codified the end of the pause. This meant that while a president can implement a payment pause in the event of a future national emergency, it cannot be done again in connection to COVID-19.

Prior to the debt ceiling bill, the Education Department said it was planning to resume payments this fall — but that was also with the expectation Biden's plan to cancel up to $20,000 in student debt would be in effect. The Supreme Court ended up striking down that plan at the end of June, meaning borrowers are now transitioning back into repayment without the reduction to their balances they were hoping for.

Student-loan companies have started to notify borrowers of what their monthly payments will be when the bill becomes due in October, and the department has announced some measures to ease the process back into repayment. They include a 12-month "on-ramp" period during which missed payments will not be reported to credit agencies, along with a new income-driven repayment plan — the SAVE plan — intended to make borrowers' monthly payments more affordable.

"We are unapologetically fixing a broken student loan system," Education Secretary Miguel Cardona said on X, formerly Twitter, on Wednesday. "The #SAVE plan is the most affordable student loan repayment plan in history – and it only takes 10 minutes to apply."

However, some borrowers have already told Insider they are experiencing issues with repayment. One borrower, for example, said her student-loan company projected a $49,000 monthly payment for her, and while the company admitted that was incorrect, she is still waiting for her statement to be fixed.

Additionally, customer service issues have plagued the student-loan industry as it has geared up for repayment. One company, Nelnet, has experienced call center and website outages following an influx of borrowers with questions about their payments. Even during the pandemic, borrowers told Insider they were experiencing hours-long hold times to get even simple questions answered from their servicer, and those who did not have time to remain on the line had no choice but to deal with uncertainty surrounding their repayment options.

Biden requested that Congress increase funding for the Education Department and Federal Student Aid to ensure the agencies have the resources they need to facilitate a smooth transition back into repayment. A memo from the Office of Management and Budget on Thursday cautioned that without increased funding, "basic on- going activities including loan servicing operations, Free Application for Federal Student Aid application processing, common origination and disbursement activities, data center hosting, and call center operations will be impeded."

As borrowers gear up to resume payments, they continue to await broad student-loan forgiveness. The Education Department has begun the process of using the Higher Education Act of 1965, but the law requires the department to go through the negotiated rulemaking process which could take at least a year.