What to Do If You Can’t Make Your Student Loan Payments

June 20, 2023 · Reading Time: 6 minutes

Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

The federal student loan payment pause is ending on August 30, 2023, and payments are expected to resume in October. Soon, borrowers will return to the reality they experienced before March 2020: making regular loan payments.

If you’re worried about being able to afford your payments, there are a number of other potential changes happening in the world of student loans that might help you. For instance, millions of people are waiting to hear the fate of the Biden-Harris Administration’s student loan forgiveness plan, which could potentially erase billions of dollars of student debt. The Supreme Court is expected to issue a ruling on the plan by the end of June 2023.

Plus, there have been changes to another federal forgiveness program already in place that could make it easier for some borrowers to qualify for it. And there are likely to be modifications to one of the income-driven repayment plans that may help many borrowers substantially reduce their monthly payments.

Before the federal student loan payment pause ends, it makes sense to learn about the latest changes affecting student loans that might apply to you. Here’s what you need to know.

What’s the Deal With Public Service Loan Forgiveness?

As you face resuming your federal student loan payments, forgiveness is probably top of mind. The good news on that front is that more borrowers may be eligible for Public Service Loan Forgiveness, thanks to some key changes to the program made by the Biden-Harris Administration in 2022.

Public Service Loan Forgiveness (PSLF) was launched in 2007 to help wipe out (after a set period of time) federal Direct Loan debt of borrowers working in public service who were struggling to repay their loans. But an estimated 99% of those who applied for PSLF were rejected on various technicalities.

In 2022 and ealy 2023, the Department of Education (DOE) made some changes to PSLF. For instance, the DOE introduced a limited waiver so that more than 236,000 borrowers were approved for over $14 billion in forgiveness. The DOE also did a separate one-time adjustment that will allow certain borrowers on income-driven repayment plans to qualify for PSLF.

There are other lasting changes to PSLF going into effect on July 1, 2023, that you may be able to take advantage of. These changes, which are intended to help make it easier for borrowers to reach PSLF forgiveness, include:

•   Borrowers can receive credit for late payments.

•   Certain types of deferment or forbearance will count toward PSLF, including deferments for cancer treatment, military service, and economic hardship, as well as Americorps and National Guard forbearances, among others.

•   Borrowers who consolidate their Direct loans will receive a weighted average of their existing qualifying payments toward PSLF.

•   There are new simplified criteria to help borrowers certify their employment.

•   There are opportunities for borrowers to correct problems

If you work for a qualifying employer, such as a government organization or nonprofit, and have eligible loans such as Direct loans, you may want to look into PSLF. You will need to sign up for an income-driven repayment plan and certify your employment to apply for the program. You can learn more information at

What About Broad Student Loan Forgiveness?

The federal student loan forgiveness plan, which was announced by President Biden in August 2022, would provide up to $10,000 in debt relief to federal student loan borrowers if their individual annual incomes are less than $125,000 (or $250,000 for married couples), and up to 20,000 in debt forgiveness for borrowers who received a Pell Grant and meet those same annual income requirements.

Approximately 26 million student loan borrowers applied for the plan, and more than 16 million were approved for forgiveness. However, the plan quickly faced a number of legal challenges and was placed on hold in the fall of 2022. The Supreme Court heard arguments on the case in February 2023. The court is expected to issue a ruling by the end of June about whether the plan can move forward.

Recommended: 9 Smart Ways to Pay Off Student Loans

Getting Ready for Life After the Pause

To help prepare for the end of the repayment pause, it’s a good idea to make sure your loan servicer hasn’t changed. You can find information on your servicer by logging into your Federal Student Aid account. Then, go to the loan servicer’s website and make sure that your address, email, and all other personal information is up to date.

If you think you may have trouble making your loan payments, you can explore options and programs that may help. For instance, income-driven repayment (IDR) plans base your monthly payments on your discretionary income and family size. On IDR plans, payments are generally 10% percent of your discretionary income, and the repayment period is 20 or 25 years. After that, any remaining balance is typically forgiven.

The Biden-Harris Administration has proposed changes to one of the IDR plans, the Revised Pay As You Earn (REPAYE) plan, that would lower monthly payments to 5% of an undergraduate borrower’s income, and reduce some borrowers’ payments to 0%. However, it’s not yet clear when the modified REPAYE plan might go into effect. But it’s something to keep tabs on.

Another option you may want to consider is student loan consolidation, which allows borrowers with more than one federal student loan to combine them into a single loan with a fixed interest rate. The fixed rate is the average of the rates of the loans being consolidated, rounded up to the nearest one-eighth of a percentage point. With consolidation, the loan term may be expanded to up to 30 years. However, with a longer term, you generally pay more in interest over the life of the loan.

Finally, student loan refinancing might be something to think about if it could benefit you. With refinancing, you replace your existing loans with one private loan. If you can get a lower interest rate and lower your monthly payment, refinancing may be an option to consider.

Just be aware that refinancing federal student loans makes them ineligible for federal protections and programs like income-driven repayment and federal forgiveness. If you think you may need access to these federal benefits, refinancing likely isn’t right for you.

It’s important to weigh the pros and cons of refinancing before moving ahead with it.

Is the Time Right to Refinance Student Loans?

Some people with federal student loans may have high interest rates from several years ago. It’s possible that refinancing with a private lender could result in a lower rate for some qualifying borrowers.

While the average rates on five- and 10-year refinanced loans have risen from what many have called historic lows, if you could qualify for a lower rate than the one you currently have, it’s possible that refinancing could help lower your monthly payments. One thing to consider, however, is that if you lengthen the term of your loan, which could also help lower your monthly payment, you’ll pay more in interest over the life of the loan.

And remember: If federal student loans are refinanced into a private student loan, federal loan forgiveness and income-driven repayment plans will no longer be accessible to you.

The Takeaway

With the federal student loan payment pause set to end, and payments expected to resume in October, now is a good time to learn about options that could make your monthly payments more affordable. These may include loan forgiveness programs, income-driven repayment plans, loan consolidation, and possibly, for some borrowers, refinancing with a private lender.

If you decide to explore student loan refinancing, SoFi offers loans with competitive rates, no fees, and flexible terms. And it takes just two minutes to see if you prequalify.

Interested in student loan refinancing? Learn more with SoFi.

Learn More

SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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