Preparing to Resume Federal Student Loan Repayment

(BPT) - After a break of nearly two years, more than 40 million federal student loan borrowers will soon need to restart their payments after January 31, 2022. And as this deadline quickly approaches, borrowers should plan ahead to make a smooth and affordable transition back into repayment.

This won’t be easy for some. The thought of resuming payments doesn’t thrill anyone, but getting on top of repaying your loans can reduce stress and anxiety. Federal Student Aid, an office within the U.S. Department of Education, released tips on how to prepare for student loan repayment. There are other factors to consider as well.

Update Contact Info and Prepare for Your Bills

To prevent any delays and ensure a smooth process, make sure your contact information is up to date in your profile on your loan servicer’s website and in your profile.

Once the payment pause is over, expect a billing statement from your loan servicer. You will get the status on your due date, interest, and payment amount. For most, a payment will be due in 21 days. If you participate in autopay, make sure that is set up with your latest bank information.

Consider a Plan that Fits Your Income

If you’re a federal student loan borrower in financial hardship, the U.S. Department of Education offers income-driven repayment plans (IDR), which could help keep you in good standing as you transition back into repayment after January 31. These plans take into consideration your income and family size, and must be recertified every year.

Almost all federal student loans are eligible for at least one of these four IDR plans:

  • Pay As You Earn
  • Revised Pay As You Earn
  • Income-Based Repayment Plan
  • Income-Contingent Repayment Plan

For the first three plans, payments are generally 10% of your discretionary income. The plans stretch payments over 20 or 25 years and forgive any remaining balance. Anyone enrolled in a plan and the Public Service Loan Forgiveness (PSLF) Program may qualify for forgiveness of any remaining balance after just 10 years of payments while working full time for a qualifying employer.

Alternatively, if you’ve previously benefited from a federal program but are now able to make bigger payments to help get you out of debt faster and reach your financial goals, then refinancing is a good alternative.

Refinancing your loans at lower interest rates and flexible terms is a great way to save you thousands in the long run, and, depending on the terms you select, could lower your monthly payment amount. Additionally, refinancing can help you consolidate both federal and private loans into one loan with one monthly bill.

Public Service Loan Forgiveness

Do you work for a nonprofit? Is your job in the public sector? Borrowers who are part of the PSLF Program receive credit for suspended payments if they have a federal Direct Loan and work a minimum 30-hour week for a qualifying employer.

Other news to be aware of: This year, President Joe Biden discharged loans totaling more than $9.5 billion for 563,000 people, including defrauded and totally disabled borrowers. Interest was also waived retroactively for more than 47,000 current and former active-duty service members deployed to areas that qualify them for imminent danger or hostile-fire pay.

If any of these categories apply to you, make sure you are obtaining the debt relief you are owed.

Restart Payments Early

Some borrowers in a position to resume student loan payments have already done so, or continued to make monthly payments even though it wasn’t required. This move allowed them to take advantage of 0% interest and likely pay down the principal on their student loans.

It’s not too late to take action. If you decide to resume payments, contact your loan servicer or go to its website to restart payments. It may also be a good idea to ensure that any payments made during the relief period are going to the principal of the loan.

Consolidating Loans

Consolidation allows borrowers with more than one federal student loan to combine them into a single loan with a fixed interest rate that is the average of the rates of the loans being consolidated (rounded up to the nearest one-eighth of a percentage point).

Borrowers may see a change in monthly payments when they consolidate their loans into a Direct Consolidation Loan, but one of the biggest benefits is convenience. Instead of multiple loans to track each month and multiple payments, there is one payment a month, at a fixed interest rate.

(The catch: the loan term also may be elongated, to up to 30 years, but a longer term means making more payments and paying more in interest than would be the case if you hadn’t consolidated. It’s important for borrowers to consider the length and interest paid over time, as well as the monthly payment, to assess whether consolidation makes sense for their financial goals.)

Explore Student Loan Refinancing

If you refinance your student loans with a private lender, a new, private loan — ideally with a lower rate — will pay off your original loans. Refinancing can be a good choice for working graduates who have higher-interest Direct Unsubsidized Loans, Graduate PLUS loans, or private loans, since interest rates are still at near-historic lows.

One important thing to note is that refinancing federal student loans means the loans are no longer subject to federal benefits like income-driven repayment, PSLF, or federal forbearance.

However, refinancing can come with a slew of perks and benefits that the federal government doesn’t offer, which could help make the transition go smoothly and give you tools to reach your financial ambitions faster.

For instance, currently, SoFi has a guaranteed rate match offer — if a competitor offers a lower rate, we'll match it and give you $100 when your loan is funded (See terms and conditions at Additionally, as a SoFi member, you’ll get access to various benefits, including: member rate discounts; 1-1, personalized, financial planning with a credentialed financial planner; free personalized career advice through 1-1 career coaching; and unemployment protection, if you become involuntarily unemployed, deferred payments may be applied for a maximum of 12 months, in aggregate, over the life of the loan (additional terms and conditions apply; see for details), and we’ll help you find a new job through our partnership with Korn Ferry.

Is Broad Loan Forgiveness a Possibility?

Some holders of student debt may hesitate to make decisions on next steps because of headlines about Congress or the president possibly forgiving student debt, which has reached nearly $1.6 trillion in federal loans and $136.3 billion in private loans.

Proposals include erasure of all student debt; forgiving $50,000 across the board regardless of income; student loan relief for private student loans that is commensurate with federal student loans; cancellation of federal student loan debt only for borrowers who earn up to $125,000; and presidential approval of $10,000 in individual forgiveness, likely just for federal student loans.

The bottom line: There is no consensus or a clear path to cancel all student loan debt — so as the loan repayment date approaches, it’s better to have a game plan than to hold your breath.

The Takeaway

While there may be a lot up in the air, existing student loan debt isn’t likely to vanish.

Understanding the repayment options available can help you strategize to handle your debt when the federal payment and interest pause ends.

Is the chance at a lower interest rate intriguing? SoFi refinances private and federal student loans with low fixed or variable rates, flexible terms, and no fees.

As you consider your choices, compare your options, plug in the numbers, and weigh different scenarios based on your current financial picture. You can always check your refinance rate without impacting your credit score at:

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