Coronavirus pauses federal student loans for 6 months — should you pay anyway?

Coronavirus Student Loan Relief Programs And Assistance

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

President Biden has declared an State of Emergency to combat the coronavirus pandemic in the United States. For borrowers with student loans, this can be a challenging time. It will only get worse if there is a nationwide quarantine or even a lock-down.

With all of the shutdowns and closures, having a stable income to pay your student loans can be a challenge. Plus, there is a lot of misinformation about what is and isn't applicable for student loan borrowers.

Let's break down what the Emergency Declaration and what it means for your student loans, as well as what will happen if we move to a full quarantine or a government lock-down.

Plus, on March 27, Congress also passed the CARES Act (i.e. the stimulus bill) which provides for more relief for student loan borrowers.

Update: President Biden extended the continuing the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until September 30, 2021.

Update: President Biden extended the pause of student loan payments and kept interest at 0% until September 30, 2021. 

This is in addition to the CARES Act, which required the Department of Education to pause student loan payments, principal, and interest, without penalty to the borrower for all federally owned loans. This is automatic – borrowers do not have to request it.

That's a huge benefit for student loan borrowers. No payments for roughly 6 months! 

Note: Interest will not capitalize during this time as well.

If you are setup for auto-debit, the ACH payment will be turned off on April 10. If you have a payment due before then, you need to manually stop it. Also, if you've already had a payment go through and you need the money, you can call your loan servicer and ask for a refund of that payment.

Another benefit is that if you're on-track for Public Service Loan Forgiveness, these 6 months of deferred payments do count for PSLF! That's awesome.

It's important to note that this only applies to borrowers with loans held by the Department of Education. This includes all Direct Loans, and Federally-held Perkins loans and FFEL Loans.

The easiest way to tell if you have Federally-held Perkins or FFEL loans is to simply login into your loan servicer's website – you'll see your loan payment $0 and interest rate 0% if they are approved loans for this.

Non-Federally Held Perkins Loans 

If you have a non-Federally held Perkins Loan, your loan servicer is allowed to grant you a three month forbearance if you cannot pay due to a COVID-19 related issue. You can ask for this simply by calling.

Beyond three months, you will need to submit documentation related to your forbearance.

This time will count towards your three year forbearance limit. Interest will also accrue during this forbearance. 

Non-Federally Held FFEL Loans 

An update on April 4, 2020 allows non-Federal FFEL holders the *option* to follow Federal guidance on suspending payments. However, as of this writing, we don't know of any FFEL loan servicers that are offering this.

The Department of Education also announced an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent, essentially giving borrowers a safety net during the national emergency.

If you're in default, now's the best time to get student loan default.

The Department of Education announced on March 25 that they will be suspending collection activity on student loans – including garnishments, tax offsets, Social Security offsets, and collection activity phone calls.

If your tax refund happened after the emergency declaration, you will get a refund. If your garnishment happened before the emergency declaration on March 13, it doesn't appear you'll get a refund.

The suspension of collection activities will last until September 30, 2021 right now. This is great for borrowers who may have had their taxes offset in past years.

Student Loans Are On Hold — Should You Pay Anyway?

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

Payments are currently suspended, without interest, for most federal student loan borrowers through September 2021. President Joe Biden extended the payment pause immediately after taking office. This policy does not apply to private student loans.

» MORE: Federal student loans are paused until Oct. 1

Borrowers can still make payments to lower their debt during this period of suspended payments, called a forbearance. Contact your servicer if you have further questions.

COVID-19 relief may affect information on this page. Know your options before making any decision.

Make no mistake: This is a pause on payments, not forgiveness. Your debt will be waiting for you when repayment begins at the end of the forbearance, unless the policy changes again. While the Biden administration has said it plans to push for expedited $10,000 forgiveness for all federal borrowers, few observers believe such a bill could be moved through Congress quickly.

Until then, here’s how to decide what to do next.

If you want to pause payments

You don't have to do anything to get a forbearance to stop student loan payments. Interest won’t continue to accrue, as it normally would.

A forbearance could give you breathing room to address other financial concerns.

Get answers about stimulus checks, debt relief, changing travel policies and managing your finances.

If you are jobless or working reduced hours, a forbearance may free up cash to pay the rent and utilities or grocery bills. Even if your pay is unaffected, a forbearance could help you divert some money toward building an emergency fund or help you pay another, more pressing debt.

Usually forbearance is granted at the discretion of the servicer and interest will continue to build. In this case, the Education Department instructed all servicers to automatically place all loans into a forbearance without interest.

If you’re behind on your student loan payments (or get behind)

Payments are automatically suspended for all borrowers, including those who were more than 31 days delinquent prior to March 13, 2020, or became more than 31 days delinquent soon thereafter. That means the loans are in forbearance and won’t default.

Default on federal loans happens when a payment is 270 days past due, sending your loan to collections and exposing you to damaged credit, garnished wages and seized tax refunds.

For borrowers in loan rehabilitation, each month of the original forbearance period and the extension through September 30, 2021 and beyond would also count toward the nine months needed for rehabilitation.

For those with federal student loans in default, all collection activities are suspended for as long as the forbearance lasts. You can get a refund for any forced student loan payments made since March 13, 2020. If your tax refund was seized before March 13, 2020, it will not be returned.

If your loans were already in forbearance, any interest that already accrued will still be added to your loan principal when your repayment begins, but during the current waiver no new interest will be calculated.

If you are seeking Public Service Loan Forgiveness

The automatic forbearance won’t undo your progress toward Public Service Loan Forgiveness, or PSLF. As long as you are still working with a qualifying employer, months spent in forbearance will count toward PSLF.

Making payments during the automatic forbearance won't get you ahead on payments. You're in the same boat whether you pay or not.

Under normal circumstances only full payments count. You also won’t lose credit for the payments you already made.

If you want to continue making payments

Borrowers might want to continue making payments on federal loans if they want to pay down their debt faster.

If you do continue making payments, you won't pay any new interest on your loans during the forbearance. This 0% interest rate will save you money overall, even though your payment won't be lower.

The full amount of your payment will be applied to the principal balance of your loan once all interest accrued prior to March 13 is paid.

Deciding whether or not to make a payment during this time will depend on your original repayment strategy:

  • Those sticking to a standard repayment timeline (typically 10 years) could consider making payments. You ly won't have much outstanding interest and additional payments can help you chip away at your principal during the break. To preserve your flexibility, we suggest opening a savings account and banking those monthly payments, then making a lump-sum payment against your highest-interest loan when repayment begins.
  • Borrowers enrolled in income-driven repayment or planning to do so shouldn't bother making payments now if the ultimate plan is to pay until the loans are forgiven — usually 20 or 25 years. If you want to pay off your loans sooner, then paying now could help you lower the total interest you owe on top of your principal.
  • Borrowers seeking Public Service Loan Forgiveness do not need to make payments until at least Sept. 30, 2021. The months of automatic forbearance will count toward the 120 payments needed for forgiveness.

Contact your loan servicer with any questions about continuing or restarting payments during the forbearance period.

If your income has changed

If you experience a change in income and still want to keep your payments going, the best way to lower your payment to something more affordable is to apply for income-driven repayment. You’ll get a new payment that is your family size and a percentage of discretionary income, and it will be in effect even after relief has expired. You can apply online at

If you are already enrolled in an income-driven plan, make sure to update your income if it has changed due to the economic downturn.

If you have FFEL Loans

If you have Federal Family Education Loans (FFEL), you are entitled to receive the no-interest forbearance only if the government owns the loans. This won’t be most FFEL borrowers — most of the loans from the now-defunct program are commercially held.

You can find out who owns your loans by logging in to using your FSA ID.

The only way to get the forbearance for commercially held FFEL loans is to consolidate your debt into a new direct loan. But there are downsides to consolidation:

  • Your repayment term will be extended.
  • Your interest rate will increase slightly.
  • Any unpaid interest will capitalize and be added to the total amount you owe.

Temporary interest-free payments may not be worth those additional long-term costs.

Plus, if you’re already making payments on an income based repayment (IBR) plan, those previous payments will no longer count toward forgiveness. You’ll have to start all over.

Consolidation can make sense if you have FFEL loans and want to qualify for Public Service Loan Forgiveness. Otherwise, stick with your current loans.

If you've experienced a change in income, you can enroll in IBR or recertify early, if you're already on this plan. IBR will still take into account your spouse’s income. Your loans are also eligible for unemployment deferment, which may make sense if you’ve lost your job but expect to start working again soon.

How to work with your servicer

If you want to restart payments during the automatic forbearance, contact your student loan servicer — it’s the private company that manages payment of your federal loans. But you don't have to do anything to get the forbearance or the 0% interest rate.

To find out which loan servicer is yours, log in to with your FSA ID.

You can get in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID.

For additional information visit for forthcoming details.


Federal student loans are paused for 6 months — should you pay anyway?

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

Federal student loan borrowers will see payments automatically suspended — without incurring interest on them — for six months, according to a measure included in federal stimulus package released last month. This policy applies only to federal loans, not to private student loans.

This option, called a forbearance, will run through Sept. 30. You will be notified of the option to continue making payments toward the principal. Contact your servicer if you have further questions.

Make no mistake: This is a pause on payments, not forgiveness. Your debt will be waiting for you when repayment begins at the end of the six-month forbearance, unless the policy changes.

And the policy could well change. The measures were made as part of the federal stimulus bill in response to the economic fallout related to the spread of coronavirus, and COVID-19, the illness it causes. Neither the outbreak nor its economic impact shows signs of slowing, and some lawmakers have proposed more dramatic measures.

“I do think there’s going to be additional waves of relief, depending on how this pandemic plays out,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.

Until then, here’s how to decide what to do next.

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

Coronavirus pauses federal student loans for 6 months — should you pay anyway?

Federal student loan borrowers are in luck (relatively speaking, at least). Thanks to the Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act , Americans with federal student loan debts can postpone payments from March 13 through Sept. 30.

There are no late fees for a missed payment during this time and zero-interest is earned on the balance — however high it may be — until Oct. 1.

For borrowers struggling financially due to the ongoing pandemic, the break on school loans is welcome news, freeing up much-needed cash for bills, essentials, and other must-haves. But what if you’re not struggling or haven’t seen lost income due to COVID-19? Should you still pause payments on federal loans? That’s another story.

Should you stop paying federal student loans during coronavirus?

Though the CARES Act offers you a break on federal student loan payments, you still have repayment options. In fact, if you have the financial means to do so, you might consider continuing to repay your school loans.


To understand your full range of repayment options, though, it’s important to know what type of loan you have. If you have a loan owned by the government, your loan will qualify for federal student loan forbearance under the CARES Act.

But many loans – even some that were “federal” loans when you initially got them – may now be held by private lenders and will not qualify.

Your best bet is to call your servicer (the company you make your payments to) to confirm which camp your loans fall into.

Refinance your student loans

If you're looking to save money during this time and aren't in any sort of financial hardship, refinancing your private student loans is a solid option, especially given the low-interest-rate environment we’re currently in.Don't forget to thoroughly research rates from multiple lenders before making a move.

Doing so could reduce your interest costs and lower your monthly payment, making it easier to stay current on your loans, despite what financial struggles you may be going through.

If this is a route you’re considering, tools Credible can make comparing your refinance options (and rates) easy.

If you have private loans or former federal loans that don’t qualify for the CARES Act relief provisions, you can:

Ask your lender about hardship options

“If the loan is a private student loan or otherwise not owned by the Department of Education, contact the lender regardless to explain the financial hardship and ask if any relief options are available,” said Leslie Tayne, founder and head attorney at debt relief law firm the Tayne Law Group.

Tayne continued, “Many private lenders are offering various forms of assistance, which may include forbearance, late payment forgiveness or lower interest rates. However, these options are not automatic with private student loans, so borrowers will need to contact their lender directly.”

Take the forbearance and pause payments

If you're going through a difficult time, however, you should just take the break in student loan payments and enjoy it.

Use the extra funds to cover your bills, increase your emergency savings, or pay off other, higher-interest debts.

If you go this route, there’s nothing you need to do, according to Amy Lins, senior director of learning & development at Money Management International.


“During this period, federal student loan borrowers do not need to take any action for their student loan payments to receive administrative forbearance,” Lins said. “Their loan servicer will automatically suspend the payments.”

Pause now and restart later

You could also pause your student loan payments for now, and restart paying down your loans when you’re back on your feet financially. For this path, you’ll need to either contact your loan servicer or make manual payments through your bank’s bill pay system or via mailed check.

“To opt- the administrative forbearance, a borrower can contact their loan servicer and have them resume auto-draft,” Lins said. “However, a borrower can also make manual student loan payments. This means they can keep the forbearance in place just in case they need it down the road while making full or partial student loan payments through their servicer’s website.”

Keep repaying your debt as normal

Another option is to just keep your original student loan repayment plan and make your student loan payments as normal. Again, you’ll need to make manual payments or contact your servicer to re-establish autopay, but the benefits could be well worth the effort — especially if it won’t hurt you financially elsewhere.

Tayne said you might even consider larger-than-normal payments if possible.


“Those that are close to paying off their loans may wish to continue payments because they’re approaching the finish line,” Tayne said. “Additionally, if you are fortunate enough to have extra funds during this time, you may consider making even larger payments towards your student loans because they will go further in expediting your repayment.”

What happens if you’re behind on student loan payments?

The good news is that the CARES Act even applies to federal student loan borrowers who are behind on their payments or in default. In fact, all payments during the six-month period will actually be counted as on-time payments, and no additional interest will accrue until October.

Even better, the act pauses all collections activities, too.


For borrowers who are applying for Public Service Loan Forgiveness or who are in the process of rehabilitating a loan in default, all paused payments during the forbearance period will count as qualifying payments.

How to use coronavirus stimulus benefits to pay down loan debt faster

Continuing to make your monthly payments despite qualifying for relief could help you pay off those student loans faster — and with less interest paid. Refinancing your loans or consolidating them into a single, lower-interest package could help you speed up loan repayment as well.

Finally, you could also use your government-paid stimulus check to make extra payments on your student loan balance.

“If you received a stimulus check and are current on other bills, consider making a loan payment with a portion of the stimulus funds,” Tayne said. “Doing so will go towards the loan principal and allow borrowers to pay down their balances faster and reduce the amount of debt they’re carrying.”


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