Editor's Note: Since the writing of this article, the federal student loan payment pause has been extended into 2023 as the Supreme Court decides whether the Biden-Harris Administration’s Student Debt Relief Program can proceed. The U.S. Department of Education announced loan repayments may resume as late as 60 days after June 30, 2023.
If you have federal student loans, you may have enjoyed a payment and interest pause for the past few years.
But after receiving several extensions, the pause may be drawing to a close. While it’s still unclear when exactly the student loan forbearance will end, payments and interest accrual could resume in late August. However, they may start back up sooner than that. The Supreme Court is reviewing two cases challenging the federal Student Loan Debt Relief program. The justices’ decision will determine the fate of the program, though it may be months before they hand down their ruling.
In the meantime, here’s what you need to know about the student loan forbearance extension, some steps to take before it ends, and alternate ways to extend or pause payment.
What Is a Student Loan Forbearance Extension?
The government forbearance — suspending loan payments and collections on defaulted loans and setting a 0% interest rate on almost all federally held student loans — started in March 2020 and was extended several times because of the Covid pandemic and its economic fallout. In November 2022, the Department of Education announced loan repayments could pick back up as late as 60 days after June 30, 2023.
Many private student loan lenders also offered a payment pause or loan modification.
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Will Student Loan Forbearance Be Extended?
It’s unclear right now when exactly the student loan forbearance will end. Much will depend on the Supreme Court’s decision and how the Biden administration decides to proceed if the court rules against its student debt relief plan.
If the Supreme Court allows the plan to go through, many borrowers could be relieved of up to $20,000 in federal student loan debt.
If the court strikes down the plan, payments would resume and interest would begin to accrue 60 days later.
If no ruling has been made by June 30 — and President Biden decides not to extend the payment pause again — payment and interest accrual would resume 60 days later, around the end of August.
Borrowers will be notified before payment restarts.
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Steps to Take Before the Student Loan Forbearance Ends
Before the student loan forbearance ends, take a look at a few steps you can take:
• Watch for your billing statement, which should arrive at least 21 days before your first payment is due, or additional communication from your student loan servicer.
• Update your contact information with the loan servicer and at StudentAid.gov . That way, you’ll learn about your new payment due date, payment amount, and even another pause.
• Update your bank account information if necessary, particularly if your loan servicer has changed.
• Consider signing up for automatic payments to avoid missing a payment.
• Update your income information if you have an income-driven repayment plan, particularly if income has decreased.
• Go over your budget and determine whether you can make your loan payments. If not, contact your loan servicer to ask about your options.
How to Extend or Pause Student Loan Payments in General
If you’re concerned about your ability to resume student loan payments, consider talking to your loan servicer about:
• General student loan forbearance
• General student loan deferment
• An income-driven repayment plan
• The Extended Repayment Plan
• Public Service Loan Forgiveness program
• Refinancing federal or private student loans with a private lender
Based on your income and family size, an income-driven repayment (IDR) plan sets your student loan payments at an affordable repayment amount per month for you. There are four plans, which last for a certain number of years and forgive any remaining balance after that.
• Revised Pay As You Earn Repayment Plan (REPAYE)
• Pay As You Earn Repayment Plan
• Income-Contingent Repayment Plan
To discuss income-driven repayment plans, contact your loan servicer or apply on StudentAid.gov.
Note that if you were on an IDR plan when the moratorium started, each month that passes in this pause counts toward your IDR forgiveness. You’ll also remain on your same plan when the payment pause ends.
Proposed Updates to the REPAYE Plan
In January 2023, the Department of Education released several proposed changes to the REPAYE plan, which would lower monthly payments and lifetime payments for a significant portion of borrowers. Though the updated plan may not be finalized until later in 2023, it includes measures to help borrowers manage their federal student loan debt:
• Individuals who make less than $30,500 a year, and families of four who make less than $62,400, would not be required to make monthly payments on their loans.
• Borrowers with undergraduate federal loans would pay 5% of their discretionary income, instead of the 10% or 15% other plans require. Students who took out federal loans for graduate school would pay 10% of their discretionary income.
• Borrowers who take out less than $12,000 would have their balance wiped out after 10 years of payment, instead of 20 to 25 years.
Refinancing higher-interest student loans with private lenders result in one new loan, ideally with a lower interest rate. If you refinance federal student loans, realize that they will no longer be eligible for federal programs like income-driven repayment plans and the payment pause.
Most lenders offer a fixed or variable interest rate and terms of up to 20 years. It might be a good idea to look for a lender that offers some kind of forbearance.
Alternative Student Loan Financing Options
As you’re thinking about college funding, keep this in mind: You can choose from a number of college financing options, including scholarships, grants, and private student loans.
• Scholarships: Scholarships are awarded based on merit or need, and students do not need to repay them. Students can get scholarships through businesses, colleges, and other organizations. There are online scholarship search tools that can help you find opportunities you might be eligible for.
• Direct PLUS Loans: Direct PLUS Loans can help graduate or professional students pay for college. They can also help parents of dependent undergraduate students pay for their child’s college education. You might want to consider a parent PLUS loan refi to a lower rate if you’re repaying a PLUS loan.
• Grants: Students can get grants from states, the federal government, a public body, and/or other organizations to pay for college.
• Private student loans: Private student loans are given by commercial lenders, not the Department of Education. Unlike most federal student loans, you will undergo a credit check and possibly have to get a cosigner to sign on the loan with you.
When will the student loan forbearance end? It’s not clear yet. Payments could resume 60 days after the Supreme Court decides whether or not to strike down the student debt relief program. If the justices have not made a decision by June 30, 2023, payments would pick back up 60 days later, around the end of August.
If you anticipate a struggle resuming payments, now may be a good time to talk to your loan servicer about other ways to extend or pause student loan payments. Options may include forbearance, deferment, an income-driven repayment plan, a loan forgiveness program, or refinancing with a private lender.
When refinancing your student loans, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid. If you refinance federal student loans with a private lender, you give up federal benefits like income-driven repayment, loan forgiveness, and federal forbearance.
How do I know when my student loan payments will resume?
Borrowers will be notified before payment picks back up. Be sure to update your contact information with your loan servicer and at StudentAid.gov.
What does student loan forbearance mean?
Forbearance means a borrower can temporarily suspend making loan payments during an approved period. There are two main types of forbearance for federal student loans: general and mandatory.
What are income-driven repayment plans?
An alternative to forbearance, income-driven repayment plans set your monthly loan payments at an affordable amount for you. There are four plans. Each lasts a certain number of years and forgives any remaining balance after that.
Photo credit: iStock/Andrea Migliarini
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.
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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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