What Federal Student Loans (Still) On a Pandemic Pause Means for Your Wallet

What Federal Student Loans (Still) On a Pandemic Pause Means for Your Wallet

Back in did you a favor and paused most student loan payments. without you even having to ask. That was only meant to last six months , but was extended five times – most recently through . The Biden admin previously said the fourth extension was going to be the last time. But understands borrowers need more time to recover from the impacts of the pandemic. Not helping: the Omicron variant. Inflation is at record highs. Oh, and loan servicers are figuring out how to reach millions of new borrowers.

Do you have federal student loans?

If you’re struggling to keep up with regular bills, your emergency fund could use some TLC, or you have higher-interest debt, you can use this extension to get ahead.

Think about your repayment strategy. If you can afford it, you might consider keeping up (or restarting) your payments despite the pause. Your money will go 100% toward the loan principal since interest won’t accrue during this time. Which means you’ll have less to pay interest on later – so you could be out of debt even sooner. Or take it slow and pay the minimum (aka, zero, for now) to free up more cash to spend or invest elsewhere.

Before it’s time to officially get back together, hit up your student loan servicers to get a refresher on how much you owe. (If you don’t know who that is, check with the Federal Student Aid Information Center.) And double check that they have your most recent contact info on file so you don’t miss any important notices related to your loans.

Review your repayment plan options. Most federal loans are eligible for at least one of several income-driven repayment plans. They generally peg how much you have to pay to how much you earn and your family size. Meaning you might qualify for lower monthly payments, but you’ll likely be paying your loans off and accruing interest longer.

Check in with your budget. If you think you’re going to have trouble affording the bill once the break is over, talk to your loan servicer ASAP. You might qualify for forbearance and deferment plans. Heads up: interest continues to accrue on loans in forbearance.

Do you have private student loans?

Sorry, this pandemic pause doesn’t apply to you. The Department of Education can’t legally tell private institutions to stop collecting your payments. But keep an eye out for settlements. One of the largest student loan servicers, Navient, will cancel balances for 66,000 borrowers to settle lawsuits accusing the company of deceptive lending practices.

If you need help, call your lender or servicer to see if they offer assistance programs. You may also be able to get a lower payment by refinancing.

Help yourself to savings. Some ideas: negotiate for a better rate on your cable and phone bills, grocery-shop smarter, make small adjustments to lower your utility bills, and shave some money off your insurance premiums.

Are you waiting for your student loan debt to get canceled?

Don’t. President Joe Biden has talked about a widespread student loan forgiveness program, especially when he was on the campaign trail. And some lawmakers, including Senator Elizabeth Warren, have been pushing for it. But that’s still very much TBD. So don’t wait for the gov to swoop in before strategizing how you’ll pay off your student loans.


Federal student loans aren’t usually this flexible. But the pandemic has changed a lot. And getting “back to normal” for 42 million federal student loan borrowers means back to monthly payments. And accruing interest on those loans. So the Department of Ed and the White House are extending their help (again) by pausing until May. Make a plan to use that time wisely. If you’re having trouble with private student loans, call your lender or servicer to see if they’re willing to help. If not, look for ways to adjust your budget and make repayment more manageable.

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