What Happens When Student Loan Payment Pause Ends? What Are My Options?

The student loan payment pause ends on May 1, 2022. It was put in place to offer temporary relief to student borrowers affected by the COVID pandemic. Only federal student loans held by the U.S. Department of Education are eligible for the payment pause and interest waiver.

The program was initiated on March 13, 2020 and has been extended several times since them. The latest deadline for when the moratorium ends is May 1, 2022. Although there is much speculation about whether or not the forbearance will be extended again, nothing is certain. As of now, payments and interest are set to resume from May 1, 2022.

If the loan payment pause is further extended, that’s good news for you. It gives you some more time to get your finances in order. However, if payments resume, you will be expected to start making monthly payments towards your debt balances from May 2022 onward.

loan payment pause ends options

What To Expect When the Payment Pause Ends

You’ll receive a notification from your loan servicer.

You may have to deal with a different loan servicer when payments resume.
If there is no announcement of a further pause extension, keep an eye out for any communication from your loan servicer. As the payment pause deadline draws closer, loan servicers will start sending out notifications to borrowers with details about upcoming payments. They will send you detailed information about your monthly payment amount and payment due date. If you don’t receive an email or letter, call them and get the details.

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Payments won’t start right away.

All payments won’t necessarily start exactly on May 1, 2022 or the 1st of the next month. It’s important to know that all loan payments don’t necessarily become due from the date the payments resume or on the first of each month. Generally, the payment due dates will stay the same as it was before the moratorium came into effect. Don’t presume anything though. If the letter from your loan servicer doesn’t specifically mention the date your first payment is due, call them and double check your payment due date.

 AutoPay won’t automatically resume.

Signing up for AutoPay is a smart move. It ensures that your monthly payments go out on time every time. As an added bonus, you also get a .025% reduction on the interest rate when you set up AutoPay. If you had been making payments through AutoPay, that would have stopped when the forbearance came into effect. This arrangement won’t resume automatically when the loan payment pause ends and payments restart. After receiving your loan servicer’s notification with the deadline date, make sure to speak to your bank and set up payments to be transferred directly every month before the deadline.

You’ll pay the same interest rate that you were paying before the payment pause was announced.

Federal student loans typically have fixed interest rates. This is regardless of market conditions. Even though market interest rates have dropped dramatically after the pandemic, you won’t benefit from this. Right now, interest rates on federal student loans are set to zero. However, when the waiver expires, you’ll go back to paying the regular interest rate that you paid earlier.

You may have to deal with a different loan servicer when payments resume.

Many loan servicers ended their contract with the federal government over the past two years. If your loan servicer was among them, you would have received notification of a new entity. Make sure to check who your loan servicer is and get their contact details well in advance.

Once Forbearance Ends, You Cannot NOT Pay

Millions of student borrowers are likely experiencing financial difficulties because of pay backs and unemployment brought about by the prolonged pandemic. If you’re one of those struggling financially, it’s important that you take time to figure out the best course of action regarding student loan repayments.

One thing is for sure, regardless of your financial circumstances, those payments are going to be due. You cannot not pay. If you miss a payment, you will pay the consequences in the form of a hefty late payment fee and interest on the unpaid amount.  All of this will send you deeper into debt.

Fortunately, you do have a few options available if you cannot afford your monthly loan repayments.

Exploring Your Federal Options for Student Loan Payment Relief After Forbearance Ends

The federal government has multiple programs in place designed to offer relief to borrowers struggling with payments. If you can’t afford the monthly payments, it’s important to spend time exploring each of these options before the payment pause expires.

Income-Driven Repayment Plans

Income-driven repayment plans have long been a popular option for financial relief. These plans set your monthly payments to a percentage of your income. If you earn a high income, your monthly payments will be correspondingly higher. If your income drops, so will your monthly payments. This ensures that they are always affordable. If your income has changed over the past two years, ask your loan servicer to recertify your income so your payments can be adjusted accordingly.

Extended Repayment Plans

These plans lower your monthly payments by extending the loan term. The extent to which you can increase your loan term will depend on the amount of debt outstanding. You could get a repayment term of up to 25 years without consolidation and up to 30 years with consolidation. Extended repayment plans are completely independent of your income.

Economic Hardship Deferment

Economic hardship deferment provides a payment pause for student loan borrowers experiencing severe financial difficulties. Borrowers have to meet certain criteria to avail of economic hardship deferment. If you meet the requirements, you may be able to defer your payments for up to a total of 3 years under economic hardship deferment. Keep in mind the federal government will pay the interest only on subsidized loans during the economic hardship deferment. However, interest will accrue on unsubsidized loans during the deferment period.

Unemployment Deferment

Unemployment deferment is available to unemployed federal student loan borrowers who are actively looking for a full-time job but are still unemployed at the time of submitting the application. Borrowers receiving unemployment benefits are also eligible. Unemployment deferment is available in increments of 6 months for up to 3 years but not at a stretch. In this case too, the federal government will pay the interest only on subsidized loans during the unemployment hardship deferment. However, interest will accrue on unsubsidized loans during the deferment period.


Forbearance pauses payments on your student loans. This forbearance is different from the government-mandated forbearance that is in effect right now. During the government-mandated forbearance, your loans are not accruing any interest. However, if you apply for forbearance after the loan payment pause ends, all loans will start accumulating interest right through the forbearance period. The federal government doesn’t pay interest on any student loans during forbearance. If interest is not paid as it accrues, it will be added to the loan balance at the end of the forbearance period. Forbearance is available for up to 3 years.

Consider Refinancing Student Loans After Forbearance Ends

In addition to federal options for student loan payment relief, there one very effective solution for lowering your monthly payments – refinancing.

Refinancing involves exchanging your current loan for a new loan. You can choose a more suitable loan term and payment options when you refinance student loans. If you can’t afford the monthly payments, you can refinance to extend the loan term and lower the monthly payments. On the other hand, you can increase the monthly payments and reduce the loan term if you have free cash and some amount of financial flexibility.

One compelling reason to consider refinancing your student loans is because interest rates are at historic lows right now. Depending on your loan balance, you could save several thousands of dollars in accrued interest with the lower rate.

The large drawback is private lenders are the only ones that can refinance your federal student loans. Refinancing your federal loans converts them into private loans and you lose all benefits and protections associated with the original federal loan. You should only consider refinancing if you’re absolutely sure you won’t need those protections.

Whatever you do, do not default on your student loan payments after the loan payment pause ends. You may pay more in interest by lowering monthly payments but that’s still better than the consequences for defaulting on the loan. Defaulting will cost you in terms of a high late payment fee and interest on the outstanding. You’ll also lose access to deferment and forbearance options and could potentially get your wages garnished if you default first.

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