When the nation shut down in March 2020 in response to the coronavirus pandemic, government leaders prioritized relief to federal student loan repayments to keep the economy afloat. Many borrowers breathed a sigh of relief as interest rates were reset to 0% and mandatory payments were paused.

The CARES Act (Coronavirus Aid, Relief and Economic Security Act) provided a payment pause for a limited time to offer financial relief to many people across the United States, but it has recently been extended through August 31, 2022. Student loan repayments will eventually resume, so here is what you need to know to help you create a successful repayment plan. 

When Do Federal Student Loan Payments Resume?

According to the CARES Act the federal student loan payment pause ends on August 31, 2022

Since 2020, the U.S. Department of Education paused federal student loan payments and interest rates to relieve economic pressure caused by the Coronavirus pandemic. However, payments are expected to restart on August 31, 2022 and all federal student loans will likely resume incurring interest month to month on the same day.

For specific information regarding your loan repayment, visit studentaid.gov or contact your federal student loan servicer directly. 

What Is the CARES Act and How Does It Affect My Student Loans?

The CARES Act was passed by the US Congress in 2020 as a way to help Americans stay financially secure amidst the pandemic. 

The act had a major impact on the economy, and provided relief to federal student loan borrowers. The act ensured that no federal student loans would accrue interest for up to one year during the pandemic. Additionally, it paused required monthly payments on federal student loans. 

It is important to note that while the CARES Act did delay loan payments, it did not result in federal student loan forgiveness. Because of that, many Democratic and progressive lawmakers are lobbying the Biden Administration for federal student loan cancellation across the board. For the time being, however, federal student loans are set to resume payments on August 31, 2022.

Alternate Repayment Options for Student Loan Relief

As borrowers face student debt repayment again, it can feel overwhelming. There are several actions you can take to make your student loan repayments more manageable. 

Some alternate repayment options for both federal and private student loans include forbearance, deferment, forgiveness and refinancing. These debt management options may be particularly helpful to federal student loan borrowers suffering from unmanageable student debt.

Let’s explore what each of these means:

Loan Forbearance

Student loan forbearance is when your loan payments are paused for a predetermined amount of time. To receive forbearance, you will have to submit a request to your student loan servicer or lender. 

Forbearance is not a magic wand to erase your debt. Both subsidized and unsubsidized loans usually accrue interest even while in forbearance. While both subsidized and unsubsidized loans are distributed from the federal loan program, the government pays your loan interest while you are enrolled in undergraduate school, meaning you pay less for the loan overall. With forbearance, you may be able to forestall your loan repayments, but you will still have to pay the accrued interest.

That said, forbearance may be an option if you do not currently make enough money to pay your student loans down every month. According to studentaid.gov, you might be eligible for student loan forbearance:

  • If you are facing financial difficulties
  • If you are responsible for medical expenses
  • If you experience a change in employment

There may be other circumstances under which your loan servicer will grant forbearance and you should reach out to your loan servicer for details and to see if you qualify.

Loan Deferment

Another strategy is to request student loan deferment. Loan deferment is similar to forbearance because it also allows you to pause your student loan payments for a specified period.

When discussing federally subsidized loans, one key difference between forbearance and deferment is that when your loan is deferred, it will not accrue interest through the deferment period. However, unsubsidized loans will continue to accrue interest and borrowers may be responsible for repayment.

Because of that, a student loan deferment is a great option for borrowers with subsidized federal loans. You will need to apply to your loan servicer for deferment. 

Loan Forgiveness Programs

The Department of Education offers a few federal student loan forgiveness programs to assist in lowering your student debt. The most common programs are:

  • Teacher Loan Forgiveness
  • Public Service Loan Forgiveness (PSLF)

The Teacher Loan Forgiveness program can discharge up to $17,500 of your student loans if you teach for five consecutive years in a qualifying low-income school. 

Meanwhile, the Public Service Loan Forgiveness program is for those who work in government and non-profit organizations. You may be eligible for this program if you have made 120 qualifying monthly payments to your federal loans and work for a qualifying employer. 

Learn more about student loan forgiveness or apply for these programs on studentaid.gov

Frequently Asked Questions

What happens if I can’t make my monthly payments on my student loans?

If your student loans are not paid on the due date, they can fall into delinquency. This may affect your credit score and eligibility for future loan refinancing or forgiveness. 

Because of that, you should do your best to ensure that your loans do not fall into delinquency. Instead, use all resources available to help make your debt and monthly payments more manageable. 

If you feel you are in danger of falling into delinquency, reach out to the Student Debt Crisis Center for assistance in paying back your loans. 

How can refinancing my loans affect my monthly payment?

Refinancing your loans could reduce your monthly payment if you secure a lower interest rate over the same term as the term left over on your existing student loan. You will still make monthly payments, but they could be at lower rates and may save you money over time.

Do private loans qualify for student loan debt forgiveness?

Private loans (or unsubsidized loans) do not qualify for any federal-government-sponsored loan forgiveness programs. However, private student loan borrowers may qualify for refinancing through independent financial institutions. 

Your lender or servicer may offer forbearance and deferment options. They may also offer refinancing. Reach out to your loan servicer to find out what options are available to make your private student loan debt more manageable.

How do I determine my eligibility for further student loan debt relief?

To discover eligibility requirements for federal student loan debt relief and forgiveness programs, visit studentaid.gov.

Refinancing Your Student Loans to Get a Lower Interest Rate through Splash Financial

Student loan debt can overwhelm borrowers quickly. However, you could make your debt more manageable through deferment, forbearance and refinancing.

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