Student Loan Relief Extended Once Again

To some borrowers, paying off student debt can feel like an impossible task. (Image: Tumisu/Pixabay)

Due to the COVID-19 pandemic, the federal government put student loan repayments on ‘pause’ since last year. Borrowers with federal student loan debt have been allowed to skip payments, so they can use their financial resources to pay for necessities like rent, food, child care, or other bills.

The White House just announced that those debt relief provisions, which were due to expire on September 30, 2021, have now been extended to January 31, 2022. No payments will be due until then. An estimated 40 million people hold federal student loan debt and are affected by the new debt extension.

Here’s what you need to know:

How long are payments suspended for?

With the new extension, no payments are due until January 31, 2022. Payments have been on pause since March 13, 2020.

What loans does this cover?

Only federal student loans. Federal loans are those held by the Department of Education. If you have private student loans, they are not covered and your normal repayment schedule applies, although you can certainly ask your lender for concessions if you are affected by the pandemic and not able to pay timely (although they have no obligation to provide special terms).

Are my loans still getting bigger each month?

No. Payments of both principal and interest are paused. Interest does not accrue and is waived.

What should I do now?

If you are on a standard repayment plan and can afford to make principal payments, consider doing so. This will help pay down the balance of your loans, as your entire payment will go to reduce principal.

One of our clients kept plugging away at paying down her graduate student loans, even during the pandemic. As a result, her loan balance is now zero, allowing her to start directing extra savings to funding a Roth IRA and adding more to her 401(k) plan. She’s put the student loans behind her and can now focus on building wealth.

If your income does not permit you to resume payments now, plan ahead for the time when payments do resume, and consider changing your repayment plan to one that is income-driven. Government officials claim the extension to next January will be the last, so it’s time to get a plan in place.

Also, check out this helpful information from the Department of Education on what you should do now to prepare for loan repayments to resume next January.

What about refinancing to a cheaper private loan?

Private loans can be cheaper than federal loans, due to today’s low interest rate environment. But you may want to hold off on that, or at a minimum, do your homework very carefully. While private loans can be cheaper, they do not have all the protections and loan repayment options that federal loans have. Plus, in the event the government comes through with any loan forgiveness (see below), private loans would probably not qualify.

What do I need to do to qualify for the loan relief extension?

Nothing. It should be automatic as long as you have federal loans held by the Department of Education Check your personal loan dashboard at

Will my loans be forgiven?

That’s been a hot topic of debate in Washington. President Biden’s campaign platform called for asking Congress to cancel $10,000 of federal student loans per borrower. Some progressive senators have asked the President to forgive up to $50,000 in loans per borrower, but it is not clear that the President has the executive authority to do so, even if he wanted to. Some say only Congress holds that power, and widespread forgiveness seems unlikely to pass Congress at this time.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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