The student loan repayment pause has been extended again…but should you still make payments?
NewsCenter1's Darsha Nelson sat down with a local financial counselor to see what borrowers can do to prepare when repayments begin
RAPID CITY, S.D. — The federal government’s student loan repayment pause began in March 2020 and was set to expire at the end of January 2022.
The more than 35 million Americans with qualifying student loan debt were granted no interest, no collections, and no payments on eligible federal loans immediately. For those struggling financially, it was a welcome break – but also a rare opportunity.
“In regard to the payment, if a person can pay, it would be to their advantage to go ahead and make payments because that is being applied to principle,” says Annie Edwards, processing director at Pioneer Credit Counseling in Rapid City.
Borrowers with the goal of paying loans off as soon as possible can take advantage of the 0% interest rate and lower their total loan amounts.
“If they have paid all their interest that is accrued before March 2020, then it would all be going on the principle,” Edwards says. “Otherwise it’s going to go to the principle and the previous interest.”
Many are still advocating for President Biden to cancel student loans entirely, a move both he and House Speaker Nancy Pelosi say the president can’t do without an act of Congress.
Regardless, it appears the May 1 extension may be the last such forgiveness for borrowers.
Edwards says the first step in preparing for repayments to start is to contact your student loan servicer to ensure they have your updated contact information, as well as to find out the due date and amount due. Whether or not your payment amount or date changes depends on which repayment plan you’re on.
Another important box to check is automatic payments. Most borrowers will have to opt-in to automatic debits before payments restart.
CLICK HERE for more information on the federal student loan repayment pause.
Below is a timeline of the COVID-19 student loan repayment pause:
- March 20, 2020: The office of Federal Student Aid began providing the following temporary relief on ED-owned federal student loans: suspension of loan payments, stopped collections on defaulted loans, and a 0% interest rate.
- March 27, 2020: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law, The CARES Act provided for the above relief measures through Sept. 30, 2020.
- Aug. 8, 2020: The COVID-19 emergency relief measures were extended through Dec. 31, 2020.
- Dec. 4, 2020: The COVID-19 emergency relief measures were extended through Jan. 31, 2021.
- Jan. 20, 2021: The COVID-19 emergency relief measures were extended through at least Sept. 30, 2021.
- March 29, 2021: More relief measures were added for borrowers in the TPD discharge process.
- March 30, 2021: The COVID-19 emergency relief measures were expanded to federal student loans made through the Federal Family Education Loan (FFEL) Program that are in default.
- Aug. 6, 2021: The COVID-19 emergency relief measures were extended until Jan. 31, 2022.
- Dec. 22, 2021: The COVID-19 emergency relief measures were extended until May 1, 2022.