What Borrowers Should Do Now That Biden Extended the Student Loan Payment Freeze Again

A photo to accompany a story about the new student loan freeze Demetrius Freeman/The Washington Post via Getty Images
President Biden during remarks at the White House on August 6, 2021.
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The Biden administration is extending the pause on federal student loan payments again — the eighth extension since March 2020.

“This is a temporary but huge win for borrowers, especially those who were not prepared to resume repayment,” said Nika Booth, a student loan expert and the creator behind Debt Free Gonna Be. “The looming deadline caused a lot of borrowers anxiety and stress, worrying about how they were going to manage student loan payments along with paying for essentials like rent or groceries.”

Secretary Miguel Cardana tweeted Tuesday afternoon that the U.S. Department of Education is extending the student loan payment pause until there’s a resolution in the lawsuits against the administration’s student loan relief plan, which could grant up to $20,000 in forgiveness to millions of borrowers.

“@POTUS and I believe it’s harmful and wrong to ask tens of millions of borrowers to resume payments on their student debt when they would be eligible for relief – if not for these meritless lawsuits,” he said in a tweet.

Cardana said the legal challenges should be resolved by June 30, 2023, and student loan payments will restart 60 days later.

We asked experts what another extension of the student loan payment freeze means for borrowers. Here’s what they said.

What Another Student Loan Payment Extension Means for Borrowers

Student loan payments, which were due in January, now won’t resume until June 30 or until after legal challenges to the administration’s student debt forgiveness plan are settled.

Mike Pierce, executive director of the advocacy group Student Borrower Protection Center, said this extension means that “struggling borrowers will be able to keep food on their tables during the holiday season and the coming months,” especially while the U.S. economy wrestles with inflationrising interest rates, and a possible upcoming unemployment wave.

Student loan expert Robert Farrington said his advice to borrowers stays the same: Be prepared and get organized. Though it’s unlikely, Farrington said if the lawsuits are resolved before June 30, there’s a chance the payment pause could end early as well, and borrowers should be prepared for that possibility. Make sure you’re signed up for student loan relief updates from the Department of Education at ed.gov/subscriptions.

If you have federal student loans, review your student loan balance and payment plan at the start of 2023 to determine if it’s the best one for your financial situation. You can use these loan simulators with the Department of Education to choose a loan repayment option that best meets your financial goals. It may also be beneficial to look at your current spending and budget and make necessary adjustments to prepare to resume making payments in the coming months. 

Borrowers who can get a refund should call and ask for it now if they haven’t yet, Farrington adds. By holding your refund in a high-yield savings account, you could earn hundreds of dollars in interest between now and next June.

“That could be over $300 in free money borrowers are leaving behind by not making that phone call,” Farrington said.

If your budget allows, be proactive and start putting away what’s typically your student loan payments into a high-yield savings account each month to ease your way into repayment. That way, you can earn interest on your savings and easily access it when the payment pause ends. You’ll be able to apply the savings to your student loan balance or keep it as an emergency fund if some of your debt is eventually forgiven by the government.

Borrowers who qualify for the Public Service Loan Forgiveness program (PSLF) should certify their employment. That’s because every month of paused payments also counts as a month for PSLF credit, Farrington said. Check out studentaid.gov to learn more about how to qualify for PSLF.

“This additional time, which is upwards of 9 to 10 months potentially, can put borrowers much closer to even more loan forgiveness,” he said.