Student Loans Are On Hold — Should You Pay Anyway?

Payments are currently suspended, without interest, for most federal student loan borrowers until sometime in 2023. This policy does not apply to private student loans.

Unless the president orders forbearance to be extended once more, the repayment clock starts again 60 days after the department is allowed to implement the program or ongoing litigation is resolved by the Supreme Court, or 60 days after June 30, 2023 — whichever comes first.

Borrowers can still make payments to lower their debt during this period of suspended payments, called a forbearance. According to the latest federal data, a total of 500,000 borrowers (about 1.16% of all 42.9 million federal loan borrowers) continued making payments during the pause. Contact your servicer if you have further questions.

» MORE: When Will Student Loan Payments Resume?

While the Biden administration has unveiled a broad cancellation plan for up to $20,000 in federal loan debt, any remaining debt will be waiting for you when repayment begins at the end of the forbearance. And that's assuming the Supreme Court rules in favor of the plan. (A decision is expected by June 2023.)

» MORE: Supreme Court student debt cancellation cases: 4 expert takeaways

If your payments bring your federal loan balance below the amount of cancellation you would qualify for if the program succeeds — it's $10,000 for all borrowers who earn less than the income limits, and $20,000 if you have ever received a Pell Grant — the federal government will automatically refund the overpayment when it discharges your debt.

On the other hand, if you'll have a balance remaining, you may want to continue to take advantage of the 0% interest rate as long as you can. Every dollar you send goes straight toward the principal.

Here’s how to decide what to do next.

If you are seeking loan forgiveness

The forbearance won’t undo your progress toward Public Service Loan Forgiveness or through other income-driven repayment loan forgiveness programs. As long as you are still working with a qualifying employer, months spent in forbearance will count. Under normal circumstances, only full payments count.

So, making payments during the automatic forbearance won't get you ahead on payments. You'll have the same payment count when the federal forbearance ends, whether you pay during the pause or not.

You also won’t lose credit for the payments you already made before the pandemic payment pause. In fact, the income-drive repayment waiver program announced in April 2022 could actually increase your payment count toward forgiveness.

Once payments resume, you may also want to review the new income-driven payment option that is scheduled to start rolling out in late 2023. For many borrowers it will result in the smallest possible payment, if that's your goal.

If you want to continue making payments

Borrowers might want to continue making payments on federal loans if they want to pay down their debt faster.

The full amount of your payment will be applied to the principal balance of your loan once all interest accrued prior to March 13, 2020, is paid.

Deciding whether to make a payment during this time will depend on your original repayment strategy:

• Those sticking to a standard repayment timeline (typically 10 years) could consider making payments. You likely won't have much outstanding interest and additional payments can help you chip away at your principal during the break. To preserve your flexibility, we suggest opening a savings account and banking those monthly payments, then making a lump-sum payment against your highest-interest loan when repayment begins.

• Borrowers enrolled in income-driven repayment or planning to do so shouldn't bother making payments now if the ultimate plan is to pay until the loans are forgiven — usually 20 or 25 years. If you want to pay off your loans sooner, then paying now could help you lower the total interest you owe on top of your principal.

• Borrowers seeking Public Service Loan Forgiveness do not need to make payments until forbearance ends sometime in 2023. The months of automatic forbearance will count toward the 120 payments needed for forgiveness.

Contact your loan servicer with any questions about continuing or restarting payments during the forbearance period.

If you have FFELP Loans

If you have Federal Family Education Loan Program debt (FFELP), you are entitled to receive the no-interest forbearance — and debt cancellation — only if the government owns the loans. This won’t be most FFEL borrowers; most of the loans from the now-defunct program are commercially held.

You can find out who owns your loans by logging in to studentaid.gov using your FSA ID.

Both types of FFELP loans qualify for loan forgiveness programs — either PSLF or income-driven repayment — requiring that you consolidate your loan into a federal Direct Loan. Normally, consolidation would be a strike against seeking forgiveness, as it would cause unpaid interest to capitalize and reset your payment count, wiping out any progress you'd made on an IDR or PSLF plan up to that point.

But neither of those downsides applies to borrowers who take advantage of the one-time IDR account adjustment (previously called a "waiver") that allows time in forbearance and some deferments to count toward income-driven loan forgiveness. Whether you have federal- or commercially held FFELP loans, you must consolidate by the end of 2023 to take advantage of this waiver. The account adjustments will happen in the spring of 2023 into 2024.

You cannot consolidate into a Direct Loan if you already did a spousal consolidation — you can split your spousal consolidation loan up again if need be — or if you have active litigation or a legal judgment against you.

How to work with your servicer

If you want to restart payments during the automatic forbearance, contact your student loan servicer — it’s the private company that manages payment of your federal loans. But you don't have to do anything to get the forbearance or the 0% interest rate.

To find out which loan servicer is yours, log in to studentaid.gov with your FSA ID.

You can get in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID.