Student loans will likely be suspended again, but you may want to continue making payments anyway

What is happening

Federal student loan repayments are expected to resume after Aug. 31, but experts believe President Biden will extend the current moratorium until at least the end of the year.

why is it important

If you can make payments during the break, you can reduce your debt instead of just paying the interest.

And after

Biden said he would make an announcement on the student loan payment freeze this month.

The current student loan repayment freeze is rapidly coming to an end. The break – the sixth since March 2020 – is due to expire on August 31, 2022.

President Joe Biden is expected to will renew the moratorium, but even if it does, borrowers might consider resuming payments. If you can afford it, it’s a good way to pay off the principal without any additional interest accruing.

This is especially true as the latest indications are that Biden long term plan for student loan forgiveness only provide $10,000 in relief. Meanwhile, the average student loan debt is about $37,000, according to federal student aid data, and some 2.1 million Americans owe more than $100,000.

Read on to learn more about the student loan payment freeze and why you might want to keep making payments now.

For more information on student loansdiscover five ways to control your student debt and get the scoop on the Civil Service Loan Cancellation Program and the for-profit college student debt forgiveness.

Why should I pay my student loans during the freeze?

Although student loan payments have been suspended for more than two years, you still owe the remaining balance. And interest will begin to accrue again, either in September or whenever the moratorium is lifted. Even if the Biden administration rolls out a student loan cancellation plan, it’s unlikely to be full debt forgiveness and it almost certainly will be. include salary caps.

Since payments during the moratorium are essentially additional, anything you can direct to your student loans will reduce your debt, saving you money in the long run.

Think of this student loan payment freeze as a long 0% APR introductory period on a credit card. Free financing means that all your payments will go directly to repaying the principal, which will reduce the interest you will pay once the moratorium is lifted.

How do I decide if I should continue to repay my loan?

The right decision for you to continue repaying your loan depends on your personal financial situation and whether you plan to cancel your loan. The big question you need to answer: “How much can I afford to spend on my student loans each month?”

You shouldn’t pay more than you can afford, of course. Going into debt in another way to pay off your student loans doesn’t make sense.

The Federal Student Aid Loan Calculator can help you figure out exactly how much you need to pay each month based on your goals, salary, loan amount, and other factors.

What if I’m on an income-driven repayment plan or working toward loan forgiveness?

Income-driven repayment plans allow you to make payments based on your salary. After the term of your plan – usually 20 to 25 years – your loan balance is forgiven. If you were on an IDR plan before the freeze, you will receive credit for the IDR discount for each month of the payment pause. Since you are already receiving this credit, there is not much incentive to pay during the moratorium if loan forgiveness is your ultimate goal.

If you are working toward loan forgiveness through the Civil Service Loan Forgiveness or Teacher Loan Forgiveness programs, any months of the student loan moratorium will also count toward your required student loan payments. federal loan relief. Again, there is little benefit to making payments during this time if this is your situation.

The PSLF program was recently expanded. It forgives any remaining debt on direct student loans for eligible public servants such as teachers, firefighters, nurses, military, and government employees who make payments on time for 10 years. If you have previously applied for loan forgiveness through the PSLF and been denied, you may now qualify through the expanded requirements that have been rolled out. in October 2021.

How do I start making payments again if I stopped in March 2020?

Start by contacting your loan manager and verifying that all of your personal information is correct and up-to-date. If you don’t know who your loan officer is, log on to the Federal Student Aid website and visit your dashboard.

Once you identify your repairer, the Federal Student Aid site provides links to repairer sites for making payments.

It should be noted that the loan officer Navient transferred all of its 5.6 million student loans to provider Aidvantage end of 2021. If Navient was your loan manager, you should be able to log in to Aidvantage with your Navient credentials.

If you were enrolled in an income-driven repayment plan designed to establish affordable monthly payments, your enrollment should still be in place. All months since March 2020 will count as paid for the years you need for the loan to be forgiven.

Also, if you signed up for automatic payments on your federal student loan before March 2020 and want to start them, you’ll need to sign up again.

Will the student loan repayment freeze be extended again?

The March 2020 CARES Act established the initial forbearance that month. President Donald Trump and the Department of Education extended the deadline twice and Biden postponed it four time since taking office.

The final deadline for the end of the moratorium on federal student loan repayments is September 1, 2022. Biden said he would make an announcement regarding another extension by then. With inflation still high – and midterm elections in November – many analysts believe he will push the deadline again to the end of the year or even the summer of 2023.

In July, the Department for Education told student loan providers not to contact borrowers yet – another sign of yet another extension.


Activists outside the White House are calling on President Biden to cancel student debt.

Anna Moneymaker/Getty Images

What are the odds that my student loan debt will be completely forgiven?

Not great unless you owe $10,000 or less in federal loans. Biden campaigned on the cancellation of $10,000 in student loan debt, and recent reports indicate that the student loan cancellation would include a income cap.

About Judith J. George

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