Federal Student Loan Payments Resume in Three Months — Here’s What You Need to Know to Be Ready

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Federal Student Loan Payments Resume in Three Months — Here’s What You Need to Know to Be Ready

The federal student loan payment freeze is set to end after September 30. For the 42.9 million Americans with federal student loan debt, that means resuming payments — often totaling hundreds to thousands of dollars — each month. 

If you’re feeling anxious about the end of federal student loan payment suspension, here’s what you need to know to prepare:  

What’s the history of the federal student loan payment freeze?

March 2020: The CARES Act passes, freezing federal student loan payments through December 31, 2020 among other pandemic relief measures.

December 2020: The Department of Education extends payment forbearance through January 31, 2021.

January 2021: In one of his first acts in office, President Biden issues an executive order to extend the payment freeze through September 30, 2021. 

Will I really have to start making federal student loan payments again in October? 

Unless you’re eligible for (and have been granted) forbearance or deferment, the answer is likely yes. There’s been some speculation that the payment freeze might be extended again, but there are a lot of reasons why it might not. In order to risk coming up short or feeling strained, borrowers should continue to prepare to resume repayment in October.  

How can I prepare to resume federal student loan payments?

Plan ahead

Now is the time to be sure you know the servicer, repayment status, and how much you owe for each of your federal student loans. To get a sense for how much your monthly bill will be after the end of suspension, review your last loan statements (from before payment suspension started). It also won’t hurt to contact your loan servicer to confirm their specific policies about the end of suspension, such as whether you’ll need to set up auto-pay or connect a payment method again. 

Keep making student loan payments

Depending on your repayment plan and your financial situation, making extra payments during the suspension could be advantageous. If you want to go this route, check out Auto-Crush to make one-time or schedule recurring payments through FutureFuel.io.

If you don’t have the cash to make extra payments outright but you still want to get ahead on your paydown, FutureFuel.io has tools that convert everyday purchases into student loan payments. 

  • Giveback collects cash back rewards when you shop online with hundreds of brands — including Walmart, Petco, Ace Hardware, Vivid Seats, and Fabletics — and applies them to your student loan debt. 
  • Round Up stockpiles spare change from everyday purchases and sends your monthly total to your loan balance. Instead of feeling guilty about spending $5.42 on that latte, you can feel good about being 58 cents closer to financial freedom. 

Lower your monthly student loan payment

If you’re having trouble affording your monthly student loan payments — or if you just want to pay less each month — an income-driven repayment (IDR) plan could be a great solution. 

The government offers four different IDR plans for federal student loans, all of which cap your monthly payment to a percentage of your discretionary income. As an added (major) bonus, IDR plans also forgive outstanding debt after 20-25 years of repayment — just keep in mind that the forgiven amount is taxable.

Not sure which plan is right for you? Our Reassess tool helps you discover, compare, and enroll in alternative federal repayment plans in minutes, and the average user saves up to $326 per month. 

Consider refinancing your student loans

Refinancing involves transferring your current student debt to a new loan through a private lender. While refinancing can be a great way to lower your monthly repayment amount and interest rate, it also carries some potential risks (including becoming ineligible for federal loan forgiveness programs) and limitations (you usually have to have an excellent credit score and high income). 

Another drawback to refinancing is that there are tons of lenders and options to navigate, which can add extra complexity to your decision to refinance. Luckily, our Refinance feature curates and compares prequalified rates from dozens of top lenders to lower the average borrower’s interest rate by 1.7% — and it’s totally free. 

Final Thoughts

All signs point to the federal student loan freeze ending after September 30, 2021. Many are still regaining their financial footing after being knocked down by the pandemic, making it even more essential to start preparing now to resume student loan payments in October. Knowing where you stand — and feeling confident about your paydown plan — is the best way to take control of your student debt ahead of the end of federal student loan suspension. 

If you’re ready to get started with Reassess, Refinance, Auto-Crush, Round Up, or Giveback, sign up for your free FutureFuel.io account today.