student loan

Everything You Need to Know About the Student Loan Pause

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Student loans are one of the most popular types of borrowing. Good education is a key to a successful future, that’s why thousands of people apply for this kind of loan every year.

Unlike simple personal loans for unemployed people, student loans are long-term borrowing, and they allow receiving significant sums. Unfortunately, paying them back can be exhausting. At the moment, these loans were paused, and the borrowers received a right to stop paying for almost a year.

You can pay to reduce the overall debt, but the payments are not obligatory. Should you keep paying, or is it better to enjoy the pause? Let’s dive into the topic and find the answer.

The Difference between Pause and Forgiveness

These things are easy to confuse, so it’s important to define the difference. When we talk about the pause, the loan stays the same; you have only the special period free of payments. During this period, the interest rates don’t build up.

In case of forgiveness, you don’t have to pay the loan off anymore. The rest of your debt is canceled, and from now on, you are free from monthly payments. There are several necessary conditions allowing applying for forgiveness. For example, it’s available for service members or teachers working in public schools.

Difference between Pause and Forgiveness

The Nature of the Pause

This program is a way to support citizens in a challenging time of pandemics. All the students having federal loans received a right to stop their payments till August 2022. Don’t confuse this program with forgiveness; it’s just the suspension.

You still have your debt and will have to pay it further when the program ends. But it is still a great opportunity to save money and live through the difficult period. Actually, some people have the largest sums they have ever seen in their lives. There are some promises from the Biden administration to introduce the forgiveness program later, but at the moment, these are just rumors.

Why It Is Useful

The pause or forbearance is especially valuable for jobless people. It gives a chance to solve the problem and earn some money. For other people, it’s an opportunity to accumulate an emergency fund and make a basement for the future. This temporary pause can make a difference and let you breathe freely. And the chance to make payments is a beneficial option in some cases; we’ll discuss it later.

You don’t have to do anything to receive the forbearance upon this program. All the federal student loans were suspended automatically. The interests are suspended too. It means that your debt doesn’t build up and stays the same.

The Pause of Delinquent Loans

The federal loan is considered default if you missed the payment of more than 270 days. Usually, it’s a problem, and the penalties and fees add interest rates. If you delayed or missed the payments for your student loan, don’t worry. The program returned then good status. This state will keep it till September.

In any situation, delinquent loans are not the best thing. You can use the time of forbearance to accumulate the necessary sum and pay off the penalties. Having a record of missed payments affects the credit score and can cause problems in your future borrowings. It’s better to solve this issue as soon as possible.

Should You Pay During the Pause?

If you decide to make monthly payments regardless of the forbearance, you can do it. Since the interest rates were suspended, you’ll repay the initial debt. It allows saving money even if the sum of payment stays the same. The decision on whether to pay should depend on your repayment strategy.

  • If you choose the standard repayment terms, the payments during the forbearance can be beneficial. You can use the break to decrease the principal debt. If you have several loans to repay, the best strategy is to save the extra money and make one payment on the most expensive loan.
  • If you plan to pay off the debt in 20 or more years and participate in income-driven programs, you can enjoy the pause and save some extra money. It’s not as beneficial to pay off the debt sooner, so you can use the pause and don’t pay.
  • If you want to apply for loan forgiveness, you can stop paying. The months of forbearance will be accounted for the necessary 120 payments. In September, you can apply to your lender for forgiveness consideration if all the conditions are met.

If you are not sure about the best strategy, contact the advisor and make an informed decision. The best choice can differ depending on the situation, and it’s necessary to analyze your conditions.

How to Act if the Income Has Changed

Life is unpredictable, and your income can change. Obviously, it affects the ability to pay off the loan. Usually, in this case, you have a right to pause the payments. But when forbearance was introduced, the process was initiated automatically. You received the time to solve the problems.

If you still can’t pay the loan after September, apply to your lender and ask for suspension. The bank will revise your application and consider the payment pause. At the moment, you don’t have to do anything to use the forbearance. Remember that this program is only for federal loans. If you are not sure, check the issuer of the loan or consult the advisor.


During the pandemic, many people lost their jobs and experienced financial problems. A student loan can be a burden in this situation. So, the forbearance program is a wonderful opportunity for many citizens. It allows for making savings and accumulating the emergency fund or decreasing the debt by making payments in this period.

The decision to make the payments during the forbearance period depends on many conditions. You should analyze the situation and revise the circumstances. It’s the only way to make a choice. In any case, use this opportunity to the fullest extent.

Also Read: Looking To Take A Personal Loan: Here Are 5 Things You Should Know



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