When Do Student Loan Payments Begin?

In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act went into effect, providing financial assistance to individuals and businesses struggling due to the pandemic. As part of the CARES Act, student loan interest rates were set at 0%, and emergency forbearance was introduced. 

While rates remain at 0% and forbearance is still in place, the payment pause is set to end during the summer of 2023. Here’s what to know about payments resuming, how to prepare, and what to expect.

When Does the Student Loan Pause End?

As it stands, the student loan payment freeze is still in place, and the date payments will resume depends in part on the fate of President Biden’s student loan relief plan, which is currently in litigation. Challengers have questioned the legality of Biden’s student loan forgiveness plan.   

If a court decision is made before June 30, 2023, the payment pause will end 60 days afterward. And if the courts are unable to come to a decision, payments will resume 60 days after June 30, 2023. 

When Does Student Loan Interest Begin to Accrue?

Once emergency forbearance has ended, and interest rates reset on student loans, interest will begin to accrue the following day. If you are unsure of your interest rates, seek clarification from your student loan servicer. 

Why Was the Student Loan Pause Extended?

Most recently, the emergency forbearance period for student loans was extended due to the pending court case related to the Biden administration’s student loan forgiveness plan. 

The plan was set to provide up to $10,000 in federal loan forgiveness and $20,000 in forgiveness for Pell Grant recipients, but it’s in litigation because challengers have questioned whether the President can legally forgive student loans. 

Will They Extend the Payment Pause Again?

While emergency forbearance and no interest have provided relief to student loan borrowers since the start of the pandemic, it’s unlikely the student loan payment freeze will be extended again. As of this article’s publication date, no legal decision has been made about the Biden loan forgiveness plan. Assuming the courts still remain undecided at the end of June, payments will resume at the end of August 2023. 

How to Prepare to Resume Student Loan Payments 

If you’re concerned about how the end of emergency forbearance will impact you financially, here are some steps to help you prepare for the end of the payment pause.

• Review your federal and private student loan information and update your automatic payment setting, if needed.
• Consider revising your payment plan or refinancing if you’re concerned about your ability to manage another monthly payment. 
• Rework your budget to account for a new monthly payment.

What To Do If You Can’t Afford Student Loan Payments Anymore

If you can no longer afford your student loan payments, you may have some options for reducing your monthly payment amount, including the following. 

Refinance Your Student Loans

Borrowers seeking lower monthly payments might consider student loan refinancing to access a lower rate or a longer repayment term. Generally, refinancing is a better option if you have private student loans since federal loans tend to have very low rates. Keep in mind if you refinance your federal loans with a private lender, you may sacrifice the potential for student loan forgiveness in the future. 

Student Loan Forgiveness Options 

Student loan forgiveness programs might also be available, depending on your situation. These programs are often tied to certain occupations. For instance, many public service roles offer the benefit of loan forgiveness to qualifying borrowers after a specific timeframe. 

Other loan forgiveness programs also exist, including:

• Student loan forgiveness for the military
• Non-profit student loan forgiveness
• Student loan forgiveness for teachers

General Forbearance 

Federal student loan forbearance can offer temporary relief if you’re struggling financially. With forbearance, you can get your monthly payments reduced or paused entirely for a set time period. While this is similar to how deferment works, there’s an important difference between deferment vs. forbearance. In forbearance, interest will still accrue on your student loans, but it won’t if they’re in deferment. 

You can apply for forbearance by submitting a request to your student loan servicer. In some cases, you may need to meet specific eligibility requirements to qualify. 

Income-Driven Repayment Plans 

Changing the repayment plan on your federal loans may be an option if you can’t afford your monthly student loan payments. Borrowers on a standard 10-year repayment plan may want to switch to an income-driven repayment plan. These plans have extended repayment terms of 20 to 25 years, and your monthly payments will vary depending on your earnings and family size. 

Refinance Your Student Loans With ELFI

If you decide refinancing is the best course of action for your student loans, ELFI can help. Potential benefits of student loan refinancing with ELFI include low rates, lower payments, longer repayment terms, and the option to consolidate multiple loans into a single, more manageable monthly payment.