You Don’t Have to Pay Student Loans Right Now, but Should You?

Judith Zeng

Federal student loan payments remain paused until September 2022. However, you can continue to make payments if you have a student loan balance… and it might be a good idea.

In April, President Joe Biden again extended the deferment of student loan payments that began at the start of the COVID-19 pandemic in March 2020. Along with the temporary pause on payments and interest, any borrowers who are delinquent or in default on their loans — about 8 million Americans — will have statuses reset and can start fresh when payments resume.

The pause on payments only applies to federal student loans; you’re required to keep paying private student loans. The moratorium on payments doesn’t apply to FFELP loans or Perkins loans that aren’t owned by the Department of Education, either.

Read on to learn more about the status of the student loan payment moratorium and why you might want to keep making payments despite the pause. For more, discover five ways to take control of your student loans and get the latest on the Public Service Loan Forgiveness program

Why should I pay my student loans during the freeze?

Although student loan payments have been paused for more than two years now, you owe the remaining balance on your loans and interest will start accruing again in September unless the deferment is extended or student loan debt is in some way canceled.

Since payments during the moratorium are essentially extra, any amount you can direct toward your student loans will reduce debt, saving you money in the long term.

This interest-free moratorium period provides an excellent opportunity to pay down the debt on your student loans, if you’re able to. Consider this student loan payment freeze like a long intro 0% APR period on a credit card. The free financing means that all of your payments will go directly to paying down the principal on your loan, reducing the amount of interest you’ll pay after the moratorium is lifted.

How can I decide if I should keep making loan payments?

Whether or not continuing to make loan payments is the right decision for you will depend on your personal financial situation and whether or not you’re working towards loan forgiveness. The big question you need to answer: “How much can I afford to put towards my student loans each month?”

You shouldn’t pay more than you can afford each month. Going into another form of debt to pay off your student loans doesn’t make much sense.

The Federal Student Aid Loan Simulator can help you determine exactly how much you should pay each month based on your goals, loan amount and other info. Once you log in to the Federal Student Aid site, the simulator will have all of your student loan details preloaded.

What if I’m on an income-driven repayment plan or working towards 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’ll receive credit toward IDR forgiveness for each month of the payment pause. Since you’re already receiving that credit, there’s not much incentive to pay during the moratorium if loan forgiveness is your ultimate goal.

If you’re working toward loan forgiveness through the Public Service Loan Forgiveness or Teacher Loan Forgiveness Program, all months of the student loan moratorium will also count toward your payments required for federal loan relief. Again, there’s little benefit to making payments during this time if this is your situation.

The Public Service Loan Forgiveness program was recently expanded. It cancels any remaining debt on direct student loans for qualifying public servants like teachers, firefighters, nurses, military members and government workers who make on-time payments for 10 years. If you previously applied for loan forgiveness through the PSLF and were denied, you may now qualify through the expanded requirements rolled out in October 2021

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

Start by contacting your loan servicer and checking to make sure that all of your personal information is correct and updated. If you’re not sure who your loan servicer is, log in to the Federal Student Aid website and visit your dashboard.

Once you’ve identified your servicer, the Federal Student Aid site provides links to servicer sites for making payments.

It’s worth noting that loan servicer Navient transferred all of its 5.6 million student loans to the provider Aidvantage in late 2021. If Navient was your loan servicer, you should be able to log in at 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 the months since March 2020 will count as paid toward the years you need for the loan to be forgiven.

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

Will the freeze on student loan payments be extended again?

The deadline for ending the moratorium on federal student loan payments has been extended six times so far. The CARES act in March 2020 established the original forbearance in March 2020. President Donald Trump and the Department of Education extended the deadline twice. 

Biden has pushed the end of the payment freeze back four times since taking office. Many Democrats want the president to postpone the deadline until at least the end of 2022, but further extensions may depend on any plans from the White House to offer some form of widespread student loan forgiveness before September.

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

Not great, unless you owe $10,000 or less in federal loans. Biden campaigned on forgiving $10,000 of 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 as of the first quarter of 2022.

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