Student-loan borrowers aren't waiting for payments to resume to start paying off their debt

• The Treasury recorded a $1 billion cash flow into the Education Department on September 1.
• That was the first day interest started accruing again on borrowers' balances.
• Borrowers are already starting to make payments before bills are due next month.

Some student-loan borrowers are making payments on their federal balances before their bills are due.

On September 1, interest began accruing on millions of federal student-loan borrowers' balances, marking the end of the over three-year payment pause introduced at the start of the pandemic. Since then, borrowers have started receiving notices from their student-loan companies on what their monthly bills will be in October, and the Education Department has recommended borrowers review their repayment options before the bills are due.

But it looks like some borrowers aren't waiting for the October restart and may be trying to get ahead of the interest that accrues daily on their balances.

As Politico first reported, the daily Treasury statement for the Education Department reported an over $1 billion cash deposit on September 1, with over $4 billion flowing into the department this month as of September 15.

While the influx of cash into the Education Department might not solely be from student-loan payments, it's clear it was a major contributor this month, based on Treasury data. When looking at the Treasury statement from September 1, 2022, the Education Department saw a deposit of just $66 million — and in September 2019, when payments were not paused, the department had a deposit of $236 million on September 3.

James Kvaal, the undersecretary of Education, told reporters on a press call last week that more than 28 million people will owe payments in October. "That's five times more than we typically have for repayment in an entire year," he added.

"There's a lot of anxiety out there," Kvaal said on the call. "And some borrowers have already begun making payments. In other cases, there will be borrowers who will take some time to work student loans back into their household budgets."

While some borrowers have been using the time to prepare for repayment, the Education Department previously said 4 million borrowers are enrolled in the new SAVE income-driven repayment plan, intended to lower monthly payments.

Still, borrowers have been running into a host of issues as they attempt to squeeze another monthly bill into their budgets. Student-loan companies have been placing borrowers on hold for hours because of the influx of calls, and some borrowers have previously told Insider their monthly payments are not accurate and they're struggling to get the issues resolved.

To give borrowers some grace as they make this transition, the Education Department announced a 12-month "on-ramp" period beginning in October, during which it will not actively report missed payments to credit agencies. However, interest will still accrue — and the department said in its guidance that it cannot control how credit-scoring companies factor in any missed payments.

Additionally, Republican lawmakers recently advanced legislation to overturn the new SAVE plan, which Rep. Bobby Scott, the top Democrat on the House education committee, said would "undermine the economic security of millions of student borrowers."

He said that the bill would send "the student loan system into disarray" and force "many borrowers into delinquency, default, or payments they can't afford."