How to Manage Your Federal Student Loans During COVID-19

Learn what to do if you’re having trouble paying your federal student loans due to COVID-19.

By , Attorney


On August 24, 2022, the Biden Administration announced that the U.S. Department of Education will extend the suspension of most federal student loan payments through December 31, 2022. Payments were set to resume on September 1, 2022, after being on hold since the beginning of the COVID-19 pandemic. This is the seventh time the payment pause has been extended in the last two years.

Borrowers will have their payments automatically suspended without penalty or interest accrual. Collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans are also paused through December 31, 2022.

But if this temporary reprieve isn't enough and you still need help with your payments once the suspension ends, you might be able to get a more permanent solution by requesting a deferment or forbearance, changing your repayment plan, or looking into whether you might qualify for loan forgiveness.

Which Loans Qualify for a Payment Suspension

The payment pause applies to Federal Direct Loans and Federal Family Education Loans (FFELs), but only FFELs that the U.S. Department of Education owns, not nondefaulted FFELs that other entities hold. Borrowers with Perkins Loans held by entities other than the Department of Education and nondefaulted HEAL loans also aren't covered.

Private student loan borrowers don't get relief either. If you have private student loans, call your lender to see if any alternatives are available.

No Interest Accrual During the Payment Suspension

Interest won't accrue on a loan for which payments were suspended. You also won't be charged late fees or penalties for nonpayment.

Collection Actions, Wage Garnishments, Treasury Offsets, Credit Reporting

Collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans are also paused during the suspension period.

How Loan Forgiveness Is Affected

Suspended payments will count as qualifying payments for the purposes of student loan forgiveness programs, including Public Service Loan Forgiveness and income-driven repayment plan forgiveness.

What Happens If You Keep Making Payments

You can choose to continue to make your payments. Because the interest is set at 0% during this time, the full amount of the payments will go toward paying down the principal due on the loan.

So, making payments during the suspension is a good opportunity to reduce your overall student loan balance if you can afford to keep paying.

More Student Debt Relief Under the Biden Administration

President Biden has canceled around $32 billion of federal student loans for 1.6 million borrowers. In 2021 and 2022, the U.S. Department of Education announced that:

Also, the American Rescue Plan Act exempts student debt forgiveness from federal taxation until January 1, 2026.

Long-Term Options for Managing Your Debt

If you're worried about making your federal student loan payments after the suspension ends, consider applying for a deferment or forbearance, changing your repayment plan, or finding out whether you might qualify for loan forgiveness.

Applying for a Deferment

With a deferment, your loan payments are postponed for a set amount of time, up to three years in the case of an economic hardship.

No interest accrues on subsidized loans, including Federal Perkins Loans, Direct Subsidized Loans, Subsidized Federal Stafford Loans, the subsidized portion of Direct Consolidation Loans, and the subsidized portion of FFEL Consolidation Loans.

Requesting a Forbearance

With a forbearance, your loan payments are postponed or reduced, and interest normally continues to accrue.

Changing Your Repayment Plan

You could also find out if you qualify for a repayment plan that will reduce your monthly payments. Income-driven repayment plans, like the Pay As You Earn Repayment Plan (PAYE), Revised Pay As You Earn Repayment Plan (REPAYE), Income-Contingent Repayment Plan (ICR), and Income-Based Repayment (IBR) Plan, are available for federal student loans. If you're eligible, your monthly payment is based on 10% to 20% of your discretionary income, and the remaining balance is forgiven after you make 20-25 years of payments.

While many repayment options are available to federal student loan borrowers, the trick is figuring out which you can choose from and, of those, which is best for your situation. To find out which types of loans qualify for each of the repayment options, and learn about eligibility criteria, see the U.S. Department of Education's website.

To apply for a different repayment plan, go to StudentAid.gov/idr, click on "Apply Now," and then start the application by clicking on the button next to "Recalculate my monthly payment."

Looking Into Student Loan Forgiveness

If you're eligible, you can eliminate your federal student loans through a loan cancellation program, like Public Service Loan Forgiveness (PSLF) or borrower defense to repayment.

To qualify for a particular program, you'll have to meet specific criteria, take certain steps, and meet various conditions.

Consider Federal Student Loan Consolidation

You might be able to get a lower interest rate and lower monthly payments by combining your student loans into a Direct Consolidation Loan.

Getting Help With Your Federal Student Loans

To learn more about repayment options for federal student loans during the coronavirus national emergency, visit the U.S. Department of Education's Federal Student Aid coronavirus website. You can also call your loan servicer. If you have a Federal Perkins Loan, contact your school.

To get assistance in dealing with your servicer or to get help understanding the different repayment, deferment, forbearance, and forgiveness options for federal student loans, consider consulting with a student loan attorney or debt negotiation attorney who deals with student loans.

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