Personal Finance

Student loan borrowers may regret not taking these 3 steps before payments restart

Key Points
  • The student loan payment pause could be extended again, but borrowers shouldn't count on it.
  • Instead, experts recommend they take these steps.
Carol Yepes | Moment | Getty Images

It's right there on the U.S. Department of Education's website: Student loan payments to restart after Aug. 31, 2022.


It's understandable. The Education Department has repeatedly set an end date for the payment pause on federal student loans, which began in March 2020, and then revised it at the last minute to give borrowers more time. The break has now been extended six times, and most borrowers haven't made a payment toward their debt in well over two years.

What's more, the timing this round is especially sensitive, said higher education expert Mark Kantrowitz.

More from Personal Finance:
Social Security isn't bankrupt: What we know about benefits
How taxes on Social Security benefits may change
Why the Social Security retirement age may move past 67

Inflation is rising faster than it has in decades and, with the November midterms looming, Democrats likely don't want to be the ones to give millions of Americans another bill while their budgets are already squeezed. The typical student loan payment is around $400 a month.

"I think that repayment will not restart on Sept. 1 — two months before an election," Kantrowitz said. "Most likely, the student loan moratorium will be extended until sometime next year."

All that being said, no official announcement on an extension has been made. Most recently, the Education Department's Under Secretary, James Kvaal, said in an interview that payments were still expected to restart after August.

CFPB expects more borrowers to default as student loan payments resume
CFPB expects more borrowers to default as student loan payments resume

Either way, Kantrowitz said, payments will eventually resume.

"Borrowers should start getting ready now," he said.

Here are three steps borrowers might consider taking now.

1. Save up

Borrowers should pretend that payments have already begun and direct their usual monthly student loan payment to a savings account, Kantrowitz said. Doing so will make the eventual resumption of payments a little less painful.

Some banks have started raising the interest rates they're offering on people's savings, and it's worth shopping around for the best deal, experts say.

2. Consider which payment plan makes the most sense

using calculator
Witthaya Prasongsin | Moment | Getty Images

Many people's lives have been changed by the pandemic.

If your circumstances look different than they did more than two years ago, it may make sense to review the different student loan payment plans to find the one that best fits your current situation.

The government's income-driven repayment programs, for instance, cap your monthly bill at a share of your discretionary income. Some payments wind up being as little as $0, and any remaining debt after 20 years or 25 years is supposed to be forgiven. The standard repayment plan, meanwhile, may come with a larger monthly payment, but if you can afford it, it allows you to pay off your debt in just 10 years.

Use one of the calculators at or to compare repayment plans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

To beat the last-minute rush, contact the loan servicer now if you'll need a deferment, forbearance or an income-driven repayment plan.
Mark Kantrowitz
higher education expert

If you're unemployed or are dealing with another financial hardship, you'll have options when payments resume. You can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn't accrue under them.

If you don't qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that interest will rack up and your balance will be larger — possibly much larger — when you resume paying.

"To beat the last-minute rush, contact the loan servicer now if you'll need a deferment, forbearance or an income-driven repayment plan — unless you happen to like being on infinite hold with your loan servicer," Kantrowitz said.

3. Get to know your loan servicer

Three companies that serviced federal student loans — Navientthe Pennsylvania Higher Education Assistance Agency, also known as FedLoan, and Granite State — all have announced they'll be ending their relationship with the Education Department.

As a result, around 16 million borrowers will have a different company to deal with by the time payments resume, or not long after, according to Kantrowitz.

For a smooth transition, double-check that your servicer has your current contact information, so you receive all the notices about the upcoming change, Kantrowitz said.

Affected borrowers should get multiple notices about their new servicer, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

If you mistakenly send a payment to your old servicer, the money should be forwarded to your new one, Buchanan said.