Can I Extend My Student Loan Payment Pause?

When Will the Federal Loan Payment Pause End?

Since March 2020, Presidents Trump and Biden have extended the federal student loan payment pause eight times in total. With a recent law passed by Congress to raise the debt ceiling limit, though, the Biden administration is prohibited from making further extensions.

As a result, federal student loans will start accruing interest again starting September 1, 2023, and monthly payments will resume on October 1, 2023. If you’ve recently graduated from college, your student loan payments will be subject to a six-month grace period based on when you left school.

While the federal student loan payment moratorium is finally coming to a close, there are still some relief options available to borrowers.

What if I Can’t Afford My Student Loan Payments?

Roughly 20% of federal loan borrowers have financial risk factors that could make student loan payments difficult to manage, according to the Consumer Financial Protection Bureau.

If you’re concerned about being able to resume student loan payments in October, here are some options you can consider.

Revamp Your Budget

With no student loan payments for more than three years, it’s understandable if your current budget doesn’t have room for the monthly obligation.

Take a look at your budget over the past few months and watch out for areas where you can cut back and make room for student loan payments. For example, you may consider cutting streaming services you don’t use or pulling back on food delivery and eating out. If your loan payments will require more drastic measures, consider taking on a roommate or otherwise finding a cheaper place to live.

Increase Your Income

If possible, consider ways you can increase how much you make each month. For example, you can ask your employer about overtime opportunities or take on a second job or even a side hustle.

With so many ways to make money on the side, consider how much time you have and your skills to determine which opportunities make the most sense.

Request Deferment

There are eight types of federal student loan deferment, including options for current students, unemployed borrowers, people experiencing economic hardship, cancer patients, graduate fellows and more. The length of deferment can vary depending on the program, so contact your student loan servicer to learn about whether you can qualify for deferment.

Note that interest may continue to accrue on your loans while you’re in deferment, but if you have direct subsidized loans, the government will cover the charges during your deferment period.

Seek Forbearance

With federal student loan forbearance, you can pause your monthly payments for up to 12 months at a time. You may qualify if you’re having financial difficulties, dealing with medical expenses or experiencing a change in employment.

Forbearance may also be available to borrowers who are serving in the AmeriCorps or participating in a dental or medical residency or internship program or who are activated members of the National Guard, among others.

Keep in mind that interest will continue to accrue during your forbearance period, and the government does not subsidize in this case.

Check With Your Employer

Some employers offer student loan repayment assistance as an employee benefit. Check with your employer’s human resources department to determine if you have access to assistance, what it looks like and what the requirements are.

Get on an Income-Driven Repayment Plan

The federal government offers four income-driven repayment plans that can reduce your monthly payments to 10% to 20% of your discretionary income. Additionally, these repayment plans extend your term to 20 or 25 years. At the end of your repayment term, any remaining debt will be forgiven.

Note that you’ll be required to recertify your income each year. Also, depending on your income situation, your monthly payment may not be enough to cover accruing interest, which can cause your balance to grow over time instead of shrink.

Consider All of Your Options for Student Loan Relief

While the student loan payment pause is ending, there are still several ways you can get help with your monthly payments. Start by evaluating your financial situation to see if you can make room for the payments in your budget.

If your financial situation is tight and you’re uncertain about whether you can make ends meet, research and compare the different relief options available to you. Whatever you do, avoid missing a payment, as it can damage your credit score.

As you prepare for student loan payments to resume, monitor your credit regularly to understand how your actions impact your credit score and so that you can spot and manage potential issues as they arise.