- The majority of federal student loans are eligible for the ongoing moratorium on payment and interest, but privately-held education debt is ineligible for this relief.
- Eligible borrowers will have received a penalty-free break spanning two and a half years, from March 2020 through August 2022.
- Whether you are eligible for the repayment suspension or not, there are relief options to consider.
Many student loans are on hold, but certainly not all of them.
Federal student loan repayment was paused for millions of eligible borrowers, beginning in March 2020, at the onset of the coronavirus pandemic. The postponement of monthly dues—and accruing interest—has been extended repeatedly by the Biden Administration, most recently through Aug. 31, 2022.
Meanwhile, ineligible federal loan borrowers, plus private loan-holders, do not have their education debt on hold. If you have to keep paying your loans, there are ways to manage your payments if you need help.
Here’s the latest on where student loan repayment stands, and what steps you can take to prepare for the resumption of payments or optimize your current bills.
Inside this article
Which student loans are on hold?
As with all things student loans-related, there is fine print. Not all student loans are on hold. Not even all federal student loans are on hold.
Here’s a list of which loan types are eligible and ineligible for the ongoing federal loan repayment suspension.
|Federal loans held by the government||Federal loans not held by the government (such as Perkins Loans lent by your school or Federal Family Education Loans owned by a guaranty agency)|
|Private or alternative loans held by financial institutions or state-run financing authorities|
Besides paused payments and interest charges, there are other benefits of the repayment suspension. If you were late on your loan payments, the pause also stipulates:
Garnishment of wages will not take place
Federal payments (such as tax refunds, Social Security benefits) will not be withheld
Collection calls will stop
Billing statements will not be mailed
Tip: Be wary of potential scammers contacting you about “Biden Loan Forgiveness” or something to that effect. If someone reaches out to you unannounced and promises immediate relief in exchange for a fee, report them to the Federal Trade Commission. Then phone your federal or private loan servicer directly to learn about the latest options available to you.
How long are student loans on hold for?
Congress passed the pandemic-inspired CARES Act, which initially brought repayment to a halt in March 2020. The latest extensions take eligible borrowers through the end of summer of 2022, a penalty-free break from payments spanning nearly two and a half years (or about 900 days).
The Biden Administration most recently extended the repayment suspension and interest freeze on April 6. There have also been recent signs that the White House was seriously considering bypassing a divided Congress with a mass debt forgiveness initiative. Most notably, Biden’s chief of staff, Ron Klain, said in a March podcast interview that it remained a possibility.
Federal student loans have remained on hold because of a few factors. These include:
The COVID-19 pandemic crunched borrower finances, making it unrealistic for many to afford their monthly dues in. Elected officials in Washington feared a dramatic uptick in student loan delinquency and default that would further affect the economy.
The federal government needed more time to manage communication between borrowers and their federal student loan servicers—the third-party contractors that manage repayment on behalf of the government—particularly given the fact that some of these servicers (such as Navient) exited the industry and newer companies were brought aboard.
Increased public and political debate around mass student loan forgiveness. The Biden Administration has been weighing its legal authority to discharge debt via an executive order. In the short term, it has focused on targeted forgiveness “where there’s clear authority for us to help borrowers,” as Politico reported.
What to do if your student loans are—or aren’t—on hold
The federal loan repayment suspension was enacted automatically. As a borrower, you didn’t have to apply for the so-called “administrative forbearance” to receive it. That said, you can log into StudentAid.gov or contact your federal loan servicer to confirm your eligibility.
If your loans are on hold
Even if your payments aren’t due in the short-term, you might have longer-term concerns about fulfilling your debt obligations. Here are some tips for a variety of scenarios.
If budgeting is a struggle…
Take care of your most pressing needs (such as housing and food) and, as possible, refill your rainy day savings.
If you’re worried about affording payments when the moratorium ends…
Consider an income-driven repayment plan that caps your monthly dues at a percentage of your income. If you’re already enrolled in IDR, you can now self-report your income to lower your payments further under the Education Department’s new rules.
If you’re experiencing hardship…
Look into deferment and forbearance options that could keep an interest-accruing pause on your payments once the mass moratorium expires. If your servicer isn’t helpful talking through these options, it could be worth talking to a credit counselor.
If your loans are delinquent or in default…
Talk to your federal loan servicer about rehabilitating your accounts. Non-payments during the moratorium count toward the requirements for getting your loan “current” again.
If you have the ability to make voluntary payments...
It could make sense to submit optional payments toward your paused debt if your balance is relatively low. That’s because, with interest rates temporarily at zero, 100% of your voluntary payment would go toward the principal on your outstanding balance, helping you to whittle it down faster.
If you have a relatively higher balance, say anything approaching or above $10,000 in outstanding federal loan debt, it might be wise to hold off on electing payments. That’s because the Biden Administration has been reportedly considering forgiving up to five figures worth of government-held debt per borrower. If you paid off your debt and forgiveness arrived later, you might regret your decision.
Tip: Beyond reviewing repayment options with your loan servicer, also take steps to ensure you can pick up where you left off once the moratorium ends, says Leslie Tayne, a New York-based debt attorney who previously battled her own student loans. “It’s also a good idea to check autopay settings to re-enroll in the payment option and ensure bank account information is accurate and up-to-date,” she says.
If your loans aren’t on hold
Even if you haven’t previously benefited from loan payments and interest being paused, there are ways to become eligible, or to get help in other ways. Consider the following strategies to make sure you don’t fall behind on your debt.
If you have ineligible federal loans…
Ask your federal loan servicer about a Direct Consolidation Loan. By grouping your ineligible federal loans into one new government-held debt, you could gain access to the moratorium (as long as it lasts), plus programs like IDR. Just be wary of consolidating, as it could reset your repayment progress toward programs like Public Service Loan Forgiveness.
If you’re worried about keeping pace with repayment…
Contact your private lender or loan servicer and request information about relief options they might offer. Some banks, credit unions and online companies might allow you to temporarily reduce your rates or payments. For federal loans, ask your federal loan servicer about deferment and forbearance options.
If you work for a generous employer…
Open a conversation with your human resources representative. Mention the fact that Congress made it easier for employers to match student loan payments without a negative tax effect on employees, at least through 2025.
If your finances are in good shape…
Gauge your potential fit for student loan refinancing—that is, consolidating your debt with a private lender at ideally better repayment terms. If you’re creditworthy enough to qualify for a lower APR elsewhere, it could save you hundreds or even thousands of dollars in interest. Give a second thought to refinancing federal loans, however, as long as mass student loan forgiveness remains a possibility. (Private loan forgiveness is generally not possible, making it less risky to refinance private loans.)
Tip: Keep in mind that if you decide to apply for an IDR plan or deferment or forbearance after the moratorium ends, interest will continue to accrue onto your debt. Also, your credit report will note these changes in your repayment, potentially affecting your credit score.