Federal student loan repayments restart in 2 months: How borrowers can prepare

Student borrowers are expected to resume payments in May after two years of federal forbearance. Here’s what you need to know. (Stock)

Federal student loan repayments will resume in May for the first time since the COVID-19 pandemic began in March 2020. That gives borrowers just two months to start preparing your finances after two years of federal abstention.

Democrats have warned President Joe Biden that resuming payments without student loan cancellation would be “disastrous” before the 2022 midterm elections. polling data suggest While most Americans want the student loan payment suspension extended through the end of the year, the Biden administration has not announced plans to extend the forbearance again.

Keep reading to learn how to prepare for federal student loan repayment, including income-contingent repayment, additional federal deferment, and student loan refinancing. You can compare student loan refinance rates on Credible for free without affecting your credit score.


How to Prepare for the End of Student Loan Forbearance

Federal borrowers are expected to start paying off student loan debt again in just two months. Missed payments can be reported to major credit bureaus, which can affect your credit score. Long periods of delinquency render you ineligible for federal benefits such as deferment or forbearance, and may potentially result in wage garnishment.

If you’re not ready to resume federal student loan payments, here’s how you can start preparing now:

  • Check the repayment terms of your loan. To visit the Federal Student Aid (FSA) website to see your loan balance, monthly payment amount, and payment due date.
  • Sign up for automatic payments again. Borrowers whose student debt was transferred to a new loan servicer will need to re-enroll in Autopay to avoid missing a payment in May.
  • Set up an income-contingent reimbursement (IDR) plan. Federal student loan borrowers may be able to limit their monthly payments to 10-20% of their disposable income via an IDR plan.
  • Apply for additional federal deferment. Economic hardship and unemployment deferment give eligible borrowers an additional 36 months of federal forbearance, during which interest accrues.
  • Refinance your student loans at a lower rate. According to recent credible analysis.

It is important to note that refinancing your federal student debt into a private student loan will make you ineligible for certain protections, such as IDR plans, administrative forbearance, and federal student loan forgiveness programs. You can learn more about refinancing student loans on Credible to determine if this debt repayment strategy is right for your financial situation.


Private lenders can offer more competitive student loan rates

Among all existing student borrowers, the average interest rate is 5.8%, according to Education Data Initiative. The interest rate you pay depends on the type of student loan you have, such as Program Direct Loans or Parent PLUS Loans. These are the average federal interest rates by loan type between 2006 and 2022, by credible data:

  • Undergraduate direct loans: 4.60%
  • Direct loans to graduates: 6.16%
  • Direct PLUS Loans: 7.20%

In comparison, qualified borrowers who refinanced their student loans on Credible during the week of February 14 experienced average rates of 3.75% for 10-year fixed rate loans and 3.10% for 5-year variable rate loans.

While federal student loan rates are based on when you took out the loan, private student loan rates tend to vary based on credit score and debt-to-income ratio (DTI). Borrowers with fair or poor credit may consider use a creditworthy co-signer to increase their chances of getting a low rate.


Student loan refinancing has the potential to saving borrowers thousands of dollars over time, but it may not be the right decision for everyone. If you are considering applying for student loan forgiveness programs like Civil Service Loan Waiver (PSLF)refinancing a private student loan would make you ineligible.

Borrowers who do not plan to use federal student loan benefits may consider refinancing their student loan while rates are low. Refinancing your student loan at a lower interest rate can help lower your monthly payments, pay off debt years faster and save money over the life of the loan.

As an added benefit, private student lenders are prohibited from charging refinancing fees. The interest rate you pay represents the total cost of borrowing for the loan. A student loan refinance calculator can help you decide if this financial strategy is right for you.

You can browse current student loan refinance rates from several online lenders in the table below. Then you can visit Credible for see your estimated rate with a soft credit check, which won’t hurt your credit score.


Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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