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Making Student Loan Payments Again

In March of 2020 student loan payments were put on federal pause and have gone through a number of extensions to its final extension through January 2022. The Department of Education announced this on August 6th. This gives student borrowers several months to prepare to make payments again.

According to PEW Research Center in a survey conducted in May of 2021, the survey indicated that borrowers may struggle when payments restart. 67% of borrowers who responded said they would have difficulty affording a monthly payment if the bill arrived in the next month. This signifies a major concern for student borrowers who have been impacted by the pandemic.

If you have federal loans and belive you will face financial hardship, you have a few options. The ongoing forbearance gives you some time to make a change to your federal loan payments and avoid defaulting on your loans. You should reach out to your servicer now. Being prepared for the expiration of forbearances will set you ahead. If you know you will have difficulty repaying debt, contact your servicer and ask about the income-driven repayment plan. See previous blog of IDR plans in detail. IDR plans cap payments at a portion of your income and extends the repayment term. If you were previously enrolled in IDR before forbearances were implemented, make sure to recertify your income if it has changed.

If you can still make payments on your federal loans, use this time to prioritize your financial goals. Consider making payments to lower your overall debt. Any payments will be applied to any accrued interest before your principal, but any payment will help reduce the overall amount you owe. Paying down other debt such as credit card or adding to an emergency fund is also a great decision.

If your federal loans were in default before forbearance, all collection activities have been suspended through the end of January 2022. Wage garnishment and collection calls have also been extended with payment forbearance. Make sure to talk to your servicer to get all the information needed to get out of default come February 2022.

If you’re pursuing Public Service Loan Forgiveness, payments are also paused through January 2022. All months of non-payment will still count toward the 120-payment requirement needed to qualify for PSLF as long as you are continuing to work full-time for an eligible organization.

If you recently graduated from college, your first payment won’t be due until repayment begins. If your six-month grace period overlaps with the automatic forbearance, your interest will not grow. This is contrary to a normal cohort year. Discover who your servicer is and determine what your first payment will look like.

If you are taking time off from school, and you last attended school in the spring, your payments would have started to come due this fall. Extended forbearance period would delay your first payment until the extension ends. If you resume classes, you can defer payments until you finish school as long as you are enrolled at least half time.

If you have private student loans, your lender may offer private student loan relief. This could be I the form of reduced or paused payments. Best decision is to contact your lender and as about any deferments or payment reductions. This may be tricky as private lenders are not required to offer any assistance but may be worth the discussion.

If you have non-government owned FFEL or Perkins loans, you do not have access to the automatic forbearance. You can take advantage of the forbearance if you decide to combine your loans into a federal direct consolidation loan. Consolidating loan will cause your unpaid interest to capitalize or be added to the principal balance. Contact your servicer to understand how consolidation will affect the total repayment amount, intertest and balance.

Understanding student loans is complex, but luckily, we are experts! PTI offers a range of options to help reduce your organizations CDR. For more information call (657) 232-4353 or email

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