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Make the Most of the Student Loan Payment Pause: 5 Ways to Take Control

From debt forgiveness options to refinancing, here's how to be smart about student loan payments in 2022.

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Student loan payments are currently on pause through August.
BrianAJackson/Getty

If you're one of the 43 million people in the US with federal student debt, your required payments are on hold until Aug. 31. The US Secretary of Education has also suggested the pause could be extended again, the fifth time since March 2020. And President Joe Biden also pledged to cancel some student loan debt, though his administration has yet to release any details.

If you want to make payments during the freeze and take advantage of the 0% interest rate, you can, but you'll need to set up repayment online or by contacting your loan provider. If you have private loans, you may have been offered extended forbearance by your loan provider, but if not, you've likely already resumed making payments.

Whatever category you fall into, once you begin making student loan payments again, there are many ways to simplify the process and even save yourself time and money along the way. Here are five ways you can make your student loan repayment easier and, if you can, pay down your balance faster, to get out of debt sooner without breaking your monthly budget.

1. Refinance for a lower interest rate

One of the best ways to optimize your student loan debt repayment is by refinancing your private (and even federal) student loans. This can help you:

  • Lock in a lower interest rate
  • Consolidate your balances
  • Simplify repayment into one account
  • Adjust your monthly payment to fit your budget

Refinancing is especially helpful if your credit has improved since taking out the loan, and can also be used to release a cosigner from your educational debt. No student loan refinancer is perfect for every borrower, though, so it's important to evaluate affordability, borrower eligibility criteria and customer service while researching refinancers. 

You can refinance all of your loans or just select balances. It's important to note, however, that if you're refinancing federal student loan debt into a private refinanced loan, you may lose out on certain benefits, including forbearance or deferment, income-based repayment and applicable student loan forgiveness opportunities.

2. Make extra payments

Whether it's an extra $20 a month or an additional payment each year, paying down your student loans a bit earlier than scheduled can help you save on interest and get out of debt sooner. Whenever you have room in your budget, making extra payments can make a dent in your student loan balance -- though you should always pay down higher-interest debt first, like credit cards and personal loans.

Most lenders will allow you to make principal-only contributions in addition to your scheduled monthly payment. The faster you reduce your principal balance, the less you'll pay in interest over the course of the loan -- and the sooner you can eliminate the debt altogether.

3. Enroll in autopay

By signing up for autopay, you can simplify your monthly payments. There's less risk of making a late payment -- which could result in fees and even impact your credit -- and it's one less thing to worry about.

Plus, it could also save you money. That's because many lenders offer discounts in exchange for setting up automatic payments on your loan. These autopay discounts are generally around 0.25%, which can add up over time.

4. Consider income-driven repayment plans

Depending on the type of loan and what you can afford each month, you may want to consider the different repayment plan options available to you.

Certain federal student loans borrowers may be eligible for income-driven repayment plans. There are four of these to choose from:

  • REPAYE (revised pay as you earn) plan
  • PAYE (pay as you earn) plan
  • IBR (income-based repayment) plan
  • ICR (income-contingent repayment) plan

While a standard repayment plan is often the best choice to pay off your loans as quickly as possible, these income-based options can help make monthly payments more affordable for borrowers who need to keep payment size small. Eligibility is based on family size and discretionary income (income after tax and necessities are paid). 

Enrolling in one of these programs now, before loans become due again in May, can make sure you're able to budget for your monthly payment.

5. Check if you qualify for student loan forgiveness 

Usually, student loan forgiveness is offered to federal loan borrowers who work as qualifying public servants, like teachers, government employees and nonprofit workers. Additionally, loan forgiveness may be on the table under unique circumstances, such as the COVID-19 pandemic, or as a result of government policy, such as the $5.8 billion discharged for borrowers with disabilities in August 2021.

Loans can also be discharged or canceled for other reasons; if your school closes before or shortly after you graduate, if you or a parent borrower passes away, or (in some cases) after declaring bankruptcy. Other borrowers may take advantage of established programs that may forgive, cancel or discharge their debt. It's important to remember, of course, that you'll still need to make on-time payments on the loan(s) until you qualify for forgiveness.