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Student loan pause set to expire, but you may still have options

Biden Student Loans
Posted at 12:49 PM, Aug 17, 2022
and last updated 2022-08-18 22:25:47-04

The current pause on federal student loan payments is set to expire in two weeks, but that has been extended at the last minute before.

The Department of Education has also recently told providers to stop notifying borrowers about their bill. There's also the question of whether president Joe Biden will issue widespread loan forgiveness, something he promised on the campaign trail.

The White House has kept its answers vague saying Biden will make a decision "soon."

“Nobody really knows for sure as of right now,” said Jacob Channel, senior economist with Student Loan Hero. “So the thing that people should be doing is really just sitting down and looking at their finances and carving out enough money, so that if payments do restart in the immediate future, they'll be able to continue making those payments.”

Experts with Student Loan Hero suggest having enough money set aside for a payment or two. This will give you enough time to figure out if it can work with your budget and look at other options.

Choosing a different payment plan or refinance could save you thousands of dollars in the long run but means you wouldn’t be eligible for any government relief.

“So I would just hold on a little bit while a little while longer before I rushed out, and refinanced, but certainly once payments have started, once we have a better understanding of what specifically is going to happen with them, then refinancing can be a very good option,” he said.

If Biden issues $10,000 per borrower in forgiveness, Student Loan Hero says that would wipe out debt completely for a lot of borrowers.

For others, it could significantly lower monthly payments.