- Student Loans Are On Hold — Should You Pay Anyway?
- If you want to pause payments
- If you’re behind on your student loan payments (or get behind)
- If you are seeking Public Service Loan Forgiveness
- If you want to continue making payments
- If your income has changed
- If you have FFEL Loans
- How to work with your servicer
- 5 Things to Know About Current Repayment Flexibilities and Your Federal Student Loans
- 1. Your Monthly Payments Are Suspended for ED-Owned Loans
- 2. Temporary 0% Interest Rate on Loans Owned by ED
- 3. Your Income Driven Repayment (IDR) Recertification Date Has Changed
- 4. Avoid Coronavirus-Related Scams!
- 5. If You’re Struggling Financially, You Have Multiple Payment Options When Payments Resume
- Federal student loans are due soon: What to know
- How the CARES Act affects your student loans
- How to manage student loans after CARES Act expires
- 1. Set up automatic payments
- 2. Income-based repayment
- 3. Consolidate federal loans
- 4. Extend student loan forbearance
- 5. Student loan refinancing
- Could federal student loan relief be extended?
- What about private student loans?
Student Loans Are On Hold — 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 studentaid.gov.
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 studentaid.gov 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 studentaid.gov 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 studentaid.gov/coronavirus for forthcoming details.
5 Things to Know About Current Repayment Flexibilities and Your Federal Student Loans
On Jan. 20, 2021, the 0% student loan interest rate and suspension of payments on federal student loans owned by the Department of Education (ED) were extended through at least Sept. 30, 2021. These relief measures began on March 13, 2020, and below you’ll find a recap of the resulting repayment flexibilities for student loan borrowers and relevant considerations.
1. Your Monthly Payments Are Suspended for ED-Owned Loans
ED placed your ED-owned student loans in a temporary payment suspension that started March 13, 2020. This means you don’t have to make monthly payments during this time. If you made a payment during this time, you can request a refund through your loan servicer.
Federal loan servicers were directed to report to credit reporting agencies as if regularly scheduled payments were occurring during the payment suspension period. Unless you chose to opt the payment suspension, servicers are reporting monthly payments of $0. Delinquency will not be reported during the payment suspension period, even if you chose to opt the payment suspension.
Generally speaking, if you were up to date on your payments before the payment suspension period began, interest accrued prior to March 13, 2020, will not capitalize. This means no outstanding interest will be added to your principal balance when the payment suspension ends.
However, if you were in the type of deferment or forbearance in which interest would normally capitalize prior to the payment suspension period, then interest accrued prior to March 13, 2020, will capitalize when your original deferment or forbearance ends or when the payment suspension ends, whichever is later.
If you were in your grace period before the payment suspension period began, any outstanding or unpaid interest on your account will capitalize as it usually does when you enter repayment.
2. Temporary 0% Interest Rate on Loans Owned by ED
From March 13, 2020, to the end of the payment suspension period, the interest rate on ED-owned student loans is automatically set at 0%. That means your student loans will not accrue (i.e., accumulate) interest during this time.
If you are able, continuing to make manual payments on the loan servicer’s website has some benefits.
3. Your Income Driven Repayment (IDR) Recertification Date Has Changed
As part of the administrative forbearance, your IDR recertification date has been changed from your original recertification date. You will be notified by your loan servicer when it is time to recertify.
If you were paying your student loans using automatic debit earlier this year, your automatic payments will resume after the COVID-19 emergency relief measures end. If you’d to make a change to your payment method, you must contact your loan servicer online or by phone.
If you’re unsure about your next payment amount, contact your loan servicer to confirm your upcoming payment amount. This info may be available to you online by logging in to your loan servicer’ s website.
4. Avoid Coronavirus-Related Scams!
There is no fee for this payment suspension or 0% interest period—not from the federal government and not from your loan servicer. If someone asks for money for either of those reasons, it’s a scam.
Your loan servicer provides free help with your questions or concerns about your loan payments. There is no coronavirus-related loan forgiveness for federal student loans.
Learn about avoiding student aid scams.
5. If You’re Struggling Financially, You Have Multiple Payment Options When Payments Resume
If you are worried you won’t be able to make your next payment after the payment suspension ends, you have options.
ED offers a variety of income-driven repayment (IDR) plans your income. Under an IDR plan, payments may be as low as $0 per month.
Check out StudentAid.gov’s Loan Simulator to learn how switching your repayment plan could impact your monthly payment amount before your next bill.
After understating all your repayment options, you can apply for a specific plan or ask to be placed on the repayment plan that results in the lowest monthly payment amount.
If you are already on an IDR plan but are currently unemployed because of the COVID-19 emergency, you can update (recertify) your information to see if you qualify for a new, lower payment amount by logging in and completing the steps below:
Any changes to your payment amount will take effect after the payment suspension ends.
If none of these options seem beneficial to you, contact your loan servicer to discuss additional forbearance options after the payment suspension ends. However, please remember that interest accrues for most borrowers on a general forbearance.
Disclaimer: This article contains general statements of policy under the Administrative Procedure Act issued to advise the public on how ED and Federal Student Aid (FSA) propose to exercise their discretion as a result of and in response to the lawfully and duly declared COVID-19. ED and FSA do not intend for this article to create legally binding standards to determine any member of the public’s legal rights and obligations for which noncompliance may form an independent basis for action.
Federal student loans are due soon: What to know
If you have federal student loans, you're ly aware that the clock is ticking down on federal relief efforts. Without another executive order from President Trump or the passage of a new coronavirus stimulus package, you'll need to be prepared to restart payments to your loans on January 31, 2021.
Contemplating a student loan refinance is one option you might consider; taking an extended forbearance another.
If you have private student loans, however, then this type of relief doesn't apply to you. If you're looking to lower monthly payments and ease the burden of student loan debt, then you may want to consider refinancing your student loans. Lock in some of the lowest interest rates ever via the online marketplace Credible.
As January draws closer, here are some of the most important things to keep in mind about student loans.
How the CARES Act affects your student loans
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) yielded a number of financial benefits, including three key provisions for federal student loan borrowers. Specifically, the CARES Act:
- Temporarily paused federal student loan payments
- Reduced interest rates on eligible loans to 0%
- Stopped the collection of defaulted student loan debt
These benefits were set to end on September 30, 2020, but were extended through January 31, 2021. Without further government action, borrowers are expected to begin resume making payments to their loan servicers in February.
If you have private student loans, you may want to consider refinancing your student loans while rates are hitting record lows. With a refinance, you're getting a new loan to pay off your existing student loans, ideally with a lower rate and a lower monthly payment. You can use Credible's free online tool to compare multiple lenders within minutes.
STUDENT LOAN PAYMENTS ARE ON HOLD – WHAT TO DO WITH THE EXTRA CASH
How to manage student loans after CARES Act expires
If you have federal student loans, you still have some time to plan for how you'll manage them once CARES Act protections end. Some options you might consider include:
- Set up automatic payments
- Income-based repayment
- Consolidate federal loans
- Extend student loan forbearance
- Student loan refinancing
1. Set up automatic payments
Automating loan payments is a simple personal finance hack that can make managing student loans easier. Putting monthly payments on autopilot can help you avoid late payments and late fees, as well as credit score damage. Many loan servicers also offer an interest rate discount for automating loan payments.
WHAT THE CARES ACT MEANS FOR YOUR STUDENT LOANS
2. Income-based repayment
Income-based repayment plans can offer lower payments if you're having trouble keeping up with your federal student loans because of a change in income. Choosing an income-based repayment option is helpful for saving money in the near-term since you could significantly lower your payment. And it could help you qualify for student loan forgiveness.
WHAT QUALIFIES YOU FOR STUDENT LOAN FORGIVENESS?
3. Consolidate federal loans
Consolidating federal loans won't result in lower rates. But it can make managing federal student loans simpler since you'll have just one loan payment going forward. That could make it easier to budget for student loan repayment each month.
Again, if you have private student loans, you'll want to refinance those student loans instead. Credible can reveal what refinance rates you qualify for. You can compare student loan refinancing rates from up to 10 lenders without affecting your credit. Plus, it's 100% free!
REFINANCE YOUR STUDENT LOANS NOW TO SAVE THOUSANDS
4. Extend student loan forbearance
You may be able to continue pausing payments temporarily. You may be able to ask for deferment or forbearance periods that allow you to take a break from repaying your loans. You could then use this time to explore student loan refinance or consolidation options.
You may also be able to make use of any grace periods you have to defer payments. With most types of federal student loans, you have a six-month grace period after you graduate, leave school, or drop below half-time enrollment.
Private student loan borrowers who are not getting any relief during the coronavirus pandemic should consider other options to lower student loan payments. Visiting Credible to explore refinancing options could be a good first step.
HOW TO PAY OFF YOUR STUDENT LOANS BEFORE PAYMENTS RESUME
5. Student loan refinancing
A student loan refinance involves taking out a new loan to pay off existing loans. If you have federal student loans you could refinance them using private student loans.
Just note: If you have federal student loans, then make sure you do your research ahead of time. Credible lists some of the pros and cons of refinancing federal student loans after the CARES Act benefits expire.
Federal student loans offer many protections and perks for students — student loan forbearance and deferment options, income-driven repayment, and potential student loan forgiveness — that private loans do not. Therefore, if you switch to a private student loan, you could lose some of those benefits.
Those who have private student loans don't have these same benefits. So, refinancing student loans while interest rates are low could yield lower monthly payments and a better rate, both of which could make managing student loan debt easier. Visit Credible to compare refinance rates from multiple lenders without affecting your credit.
10 OF THE BEST STUDENT LOAN REFINANCE COMPANIES
Could federal student loan relief be extended?
It's possible that you may be able to defer making payments to your loan balance beyond the end of January. But for that to happen, one of these scenarios would ly have to take place:
- President Trump could sign another executive order extending CARES Act forbearance beyond the end of January
- Congress could pass another coronavirus stimulus package that includes student loan relief before the end of the year
- President-elect Biden could sign an executive order offering federal student loan relief once he takes office on January 20, 2021
Whether the current administration or the next one opts to extend federal student loan relief, it's important to plan now as if you will be making payments come February.
What about private student loans?
Remember, if you have private student loans the CARES Act protections don't apply.
The good news is that you can still pursue student loan refinancing to manage private student loans.
With interest rates as low as they are, now could be good for a student loan refinance if you're interested in saving money or getting lower payments.
You can learn more about private student loan refinance options by visiting Credible and comparing rates from multiple private student loan lenders.
It's also helpful to use an online student loan refinancing calculator to estimate your new monthly payments.
STUDENT LOAN DEFERMENT VS. FORBEARANCE: WHAT'S THE DIFFERENCE?