Federal student loan payments remain suspended, this time until September 2022. However, if you have a student loan balance, you can still continue to make payments, and that might be a good idea.
In April, President Joe Biden again extended the moratorium on student loan repayments that began at the start of the COVID-19 pandemic in March 2020. Along with the temporary pause on payments and interest, any borrower in delinquent or defaulted on its loans – about 8 million Americans – will have their status reset and start fresh when payments resume.
The pause on payments only applies to federal student loans. If you have a private student loan, you are still required to keep paying. The payment moratorium also does not apply to FFELP loans or Perkins loans that are not owned by the Department of Education.
Read on to learn more about the status of the student loan repayment moratorium and why you might want to continue making payments despite the pause. To learn more, discover five ways to take control of your student loans and get the latest information on the Public Service Loan Forgiveness Program.
Why should I pay my student loans during the freeze?
Although student loan repayments have been suspended for over two years now, you still owe your loan balances and interest will resume in September.
Since payments during the moratorium are essentially additional, any amount you can allocate to your student loans will reduce your debt, saving you money in the long run.
This interest-free moratorium period provides a great opportunity to pay off your student loan debt, if you are able. Think of this student loan payment freeze as a long introductory period of 0% APR on a credit card. Free financing means that all of your payments will go directly to repaying the principal of your loan, which will reduce the amount of interest you will pay after the moratorium is lifted.
How do I decide if I should continue to repay my loan?
Whether or not pursuing loan repayments is the right decision for you will depend on your personal financial situation and whether or not you are working on canceling 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 each month. Going into debt in another way to pay off your student loans doesn’t make much 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, loan amount, and other information. Once you have logged into the Federal Student Aid site, the simulator will have all of your student loan details pre-loaded.
What if I’m on an income-driven repayment plan or working toward loan forgiveness?
Income Contingent Repayment (IDR) plans allow you to make payments based on your salary. After the term of your plan – usually 20 to 25 years – your loan balances are 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 receive this credit, there is not much incentive to pay during the moratorium, if loan forgiveness is your goal.
If you are striving for loan forgiveness through the Civil Service Loan Forgiveness or Teacher Loan Forgiveness Program, any months of the student loan moratorium will also count towards the required payments. for federal loan relief. Again, there is little benefit to making payments during this time.
The civil service loan cancellation 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 already applied for loan forgiveness through the PSLF and been denied, you may now qualify thanks to the expanded requirements rolled out last October.
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 loan servicer Navient transferred its 5.6 million student loans to provider Aidvantage at the end of 2021. If Navient was your loan servicer, you should be able to log into Aidvantage with your Navient credentials.
If you were enrolled in an income-driven repayment plan designed to establish affordable monthly payments, you’re still enrolled. Every month since March 2020 will count as paid for the 20-25 years of payments 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 deadline to end the moratorium on federal student loan repayments has been extended six times so far. The March 2020 CARES Act established initial forbearance in March 2020. President Donald Trump and the Department of Education extended the deadline twice.
President Biden has pushed back the end of the payment freeze four times since taking office. Many Democrats want the president to extend the deadline until at least the end of 2022, but further extensions may depend on any White House plans to offer some form of widespread student loan forgiveness before September.
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 forgiveness of $10,000 in student loan debt, and recent reports indicate that student loan forgiveness would include an income cap.
According to federal student aid data, borrowers have an average of $37,014 in student loan debt and 2.1 million borrowers owe more than $100,000 in the first quarter of 2022.