The federal assistance granted to students during the pandemic is expiring soon. The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 set student loan interest rates to 0% and placed an emergency pause on student loan repayment. 

However, borrowers benefitting from the freeze should prepare for changes following the end of the CARES Act’s benefits this year. While there are opportunities for loan forgiveness, Here’s what to know about the continuation of loan repayment and interest accrual.

When Does the Student Loan Pause End?

Students can expect loan repayment to resume in October 2023, or 60 days after the court reaches a verdict on the Biden-Harris loan forgiveness initiative. Student loans will begin to accrue interest starting September 1, 2023. 

Interest rates on student loans will revert to their original rate. Interest will not capitalize on non-consolidated loans for six months after the pause ends. The Department of Education expects to give borrowers a warning before their payments officially resume. 

Although student loans may be challenging to pay off, multiple solutions exist. Students should begin research into repayment while the pause still stands. 

Will My Student Loans Still Be Forgiven?

Student loan forgiveness is dependent upon the verdict of President Biden’s loan forgiveness initiative. Challengers have questioned the legality of Biden’s student loan forgiveness plan. Regardless, the court decision is expected to release by the end of July 2023. 

If passed, the Student Debt Relief Plan provides $20,000 in debt relief to Pell Grant recipients and up to $10,000 to non-Pell Grant recipients. Your annual income must be below $125,000 (if you are single) or under $250,000 (if married) to qualify for loan forgiveness. The same criteria apply to Parent PLUS Loans. The FSA website provides details on qualifications here.

Student loan repayment will resume this fall regardless of the court’s decision for everyone who does not qualify. 

How to Prepare to Resume Student Loan Payments 

If you’re concerned about how the end of emergency forbearance will impact you financially, here are some steps to help you prepare for the end of the payment pause.

• Review your federal and private student loan information and update your automatic payment setting if needed.
• Consider revising your payment plan or refinancing if you’re concerned about your ability to manage another monthly payment. 
• Rework your budget to account for a new monthly payment.

What To Do If You Can’t Afford Student Loan Payments Anymore

If you can no longer afford your student loan payments, you may have some options for reducing your monthly payment amount, including the following. 

Refinance Your Student Loans

Multiple avenues exist for refinancing your student loans once the repayment period resumes in the fall. Refinancing can lower monthly payments and make repayment more manageable for borrowers. 

Students can refinance their loans without losing eligibility for Biden’s loan forgiveness plan. Loan forgiveness extends to federal debt, which can scare off borrowers from refinancing this fall. 

However, loan forgiveness only goes up to $20,000. To still be eligible for loan forgiveness and lower payments, borrowers with large amounts of federal debt should look into refinancing the amount of their debt that does not qualify for forgiveness. 

Student Loan Forgiveness Options 

Student loan forgiveness programs might also be available, depending on your situation. These programs often correspond to certain occupations. For instance, many public service roles offer the benefit of loan forgiveness to qualifying borrowers after a specific timeframe. 

Other loan forgiveness programs also exist, including:

• Student loan forgiveness for the military
• Non-profit student loan forgiveness
• Student loan forgiveness for teachers

General Forbearance 

Federal student loan forbearance can offer temporary relief if you’re struggling financially. You can get your monthly payments reduced or paused entirely for a set time period. While this is similar to deferment, interest will still accrue on your student loans, but it won’t if they’re in deferment. 

You can apply for forbearance by submitting a request to your student loan servicer. In some cases, you may need to meet specific eligibility requirements to qualify. 

Income-Driven Repayment Plans 

Changing the repayment plan on your federal loans may be an option if you can’t afford your monthly student loan payments. Borrowers on a standard 10-year repayment plan may want to switch to an income-driven repayment plan. These plans have extended repayment terms of 20 to 25 years, and your monthly payments will vary depending on your earnings and family size. 

Refinance Your Student Loans With ELFI

If you decide refinancing is the best course for your student loans, ELFI can help.* Potential benefits of student loan refinancing with ELFI include low rates, lower payments, longer repayment terms, and the option to consolidate multiple loans into a single, more manageable monthly payment.

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