Thanks to emergency relief measures passed during the Covid-19 pandemic, most borrowers have been able to skip payments on federal student loans since March of 2020. In the meantime, interest rates have been set at 0%, making it easier for debtors to pause their payments while they recover from the financial implications of the pandemic.

While relief was supposed to have expired already, forbearance for federal student loans is currently extended to January 31, 2022.

What happens next? Well, the Department of Education has made clear this was the final extension, so borrowers need to be ready to resume payments in February 2022.

If you haven’t been making student loan payments since last year, here are some of the most important steps to take right now.

Check In With Your Loan Servicer

While there are a lot of expected changes among federal student loan servicers on the way, including the exit of PHEAA (or FedLoan Servicing), the loan servicer you have now is still the one you should work with.

While you have the time, it’s smart to log into the account you were using to pay your student loan bill before the pandemic. If you don’t have an online account, you can also take the time to create a new one.

Don’t know who your loan servicer is? According to, you can find out by logging into your federal student loan account dashboard using your FSA ID, your email, or your phone number, or by calling the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Assess Your Financial Situation

Can you afford to pick up your student loan payments where you left off? If you are one of the millions of Americans who never lost income during the pandemic, then it’s possible repayment won’t be a hardship. However, a recent study did show that 71% of student loan borrowers were ready to resume their payments.

If you’re worried you wont be able to make your student loan payments, however, you do have some options. First, you can put in a request for economic hardship with the U.S. Department of Education. Second, you could also request deferment based on your current state of unemployment . Both of these options have a maximum eligibility timeline of 36 months, but interest doesn’t accrue during periods you’re eligible.

You can also apply for a general forbearance , which can be a good option if you don’t have a specific economic hardship and you’re currently employed. Just note that, during a general forbearance, your payments are paused by interest still accrues on your loans. However, the best option may be to simply ensure you’re on the right repayment plan.

Explore Alternate Repayment Plans

Maybe you’re finding yourself somewhere in the middle. For example, you have a job and an income you can use to pay your student loans, but the current monthly payment is outside of what you’re comfortable with or able to afford.

In that case, you should explore switching up your payment plan to a new one. When it comes to federal student loans, you do not have to go with the basic 10-year repayment plan if you don’t want to. You can opt for an extended repayment plan that lasts for 25 years, or you could even choose a graduated repayment plan that lasts for up to 30 years and slowly increases your payment amount over time. Just keep in mind that extending your repayment timeline can lead to paying a lot more in interest over the duration of your loan agreement, even if your monthly payment goes down considerably.

Conversely, you can also explore income-driven repayment plans, which let you pay a percentage of your discretionary income for 20 to 25 years before forgiving any remaining loan balances. If your income is low enough, your monthly payment on an income-driven repayment plan could be $0. Even better, most student loan forgiveness programs require you to be on an income-driven plan.

Thinking Of Refinancing? You May Want To Wait

You may be tempted to refinance your student loans in an effort to benefit from the low interest rate environment we’re in right now. If you have federal student loans, however, you’re probably better off waiting to see how everything shakes out over the next few months, and for more reasons than one.

First, it’s still possible the Biden administration will extend the pause on federal student loan payments (new variants of Covid-19 keep emerging and who knows what else may come). You can pick up with your monthly payments if you want to if this is the case, but you should strive to take advantage of 0% interest as long as it’s offered.

Second, it’s possible that some level of student loan forgiveness will be extended in the coming year. While President Biden may not forgive $50,000 in federal student loan debt through executive action like many Democratic lawmakers prefer, some experts have predicted that something is bound to happen over the next 12 months.

The most likely scenario for student loan forgiveness is one where borrowers with federal loans who meet specific income guidelines may have up to $10,000 of their loans forgiven. Not only has President Biden mentioned $10,000 in forgiveness as a target in the past, but it seems like a more realistic amount of forgiveness to be pushed through via executive action or through Congressional approval.

You shouldn’t count on student loan forgiveness at all, but you may live to regret it if you refinance your federal loans with a private lender and some sort of forgiveness plan comes to fruition. Either way, it may be better to wait to make this decision, or at least until after January 31 when federal loan payments are set to resume.

By Robert Farrington, Senior Contributor

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