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Navigating Student Loan Repayment: Tips and Options for Success

Student Loan Repayment Pause

Federal Loans: What Borrowers Need To Know

In light of the COVID-19 pandemic, the government has introduced a student loan repayment pause for federal loan borrowers. The pause is meant to provide relief to borrowers during such a challenging time.

If you have federal loans, there are a few things you should know about the repayment pause.

Interest Accrual

The good news is that interest will not accrue while the repayment pause is in effect. This means that the balance of your loan will not increase during the pause, and you will not be responsible for any interest that would have accumulated during this time.

Payment Pause

The pause period began in March 2020 and is set to expire at the end of September 2021. During this time, you are not required to make any payments towards your loan.

Your account will be temporarily deemed up-to-date, and there won’t be any penalty fees or impacts on your credit score if you do not make a payment during the pause.

Loan Forgiveness Programs

For borrowers with student debt, the possibility of loan forgiveness is always a factor to consider. The loan forgiveness program can be either government-backed (such as the Public Access Forgiveness program) or employer-sponsored.

Unfortunately, the repayment pause does not impact the eligibility for loan forgiveness programs. In other words, the period where you aren’t repaying your loan doesn’t count towards meeting your requirements for loan forgiveness programs.

Private Loans: What Borrowers Need To Know

While federal loans come with more flexible and lenient repayment terms, private loans may not have the same advantages. Here is what you need to know about repayment pause for private loan borrowers.

Payment Pause

Unlike federal loans, private loans do not come with a mandatory payment pause. Some private lenders might offer borrowers a chance to pause their loan repayment, but this is not a standard policy across lenders.

If you have private loans that require repayments regularly, it’s essential to check with your lender about their policies on repayment pause.

Regular Payments

If you cannot secure a repayment deferral with your private lender, you will need to make regular payments on your loan. Skipping payments on private loans outside of an agreement can come with consequences.

This may impact your credit score, make it harder to find lenders for future loans, and accumulate additional fees and interest.


If you find that making regular payments is financially challenging, you may explore refinancing with a private lender.

Refinancing involves taking out a new loan with new repayment terms and using it to pay off the existing loan.

Refinancing is an option only if you meet the lender’s credit score criteria and borrowing capacity.

Income-Based Plan

If refinancing is not an option, private loan borrowers can solve their repayment challenges with an income-based payment plan. This payment plan takes your current income and adjusts your monthly payments based on your income level.

Tips for Repayment Planning and Preparation

If you’re gearing up to start repaying your student loans and are feeling overwhelmed, here are some tips to help you prepare for the road ahead.

Plan to Add the Loan Back Into Your Budget

Making loan payments a priority is a crucial part of debt repayment. Yet, if you’re not adequately prepared to make steady payments, you might end up falling behind on your loan balances.

Budgeting is a crucial tactic to make sure you’re ready for the challenges of repayment. Try the 50/30/20 rule for budgeting where 50% of your income goes towards fixed expenses, like housing or utilities, 30% of your income goes to flexible spending, and 20% of your income goes towards savings or paying off debts.

Set Realistic Savings Goals

If you’re looking to save, put away a percentage of your income each month towards your savings. This is a great way to prepare for future repayments and avoid any credit defaults.

Start with a goal to save 5-10% of your post-tax income each month. As you get more comfortable with your budget, you can increase that amount.

Explore Repayment Options

There are various repayment options you can pursue to pay off your loans sooner. If you have multiple loans and payments at different interest rates, consider consolidation.

Consolidating your loans combines your multiple payments into a single payment, often at a more favorable interest rate. If consolidation isn’t right for you, explore income-driven repayment plans or refinancing options to adjust your payment due date.

Enroll in Autopay

Enrolling in autopay can reduce your interest rate percentage by up to 0.25%, and help you avoid missing payments. By automating your payments, you can be sure they’re taken care of without worrying about reminders or due dates.

Keep Calm

Finally, it’s important to remember that student debt is considered a good debt since it furthers educational opportunities. It’s essential to create a budget and a plan to stay on top of your repayments and avoid defaulting.

Loan repayment may seem daunting, but it’s entirely manageable with the right preparation. In conclusion, understanding how to repay student loans is a crucial component of budgeting and financial planning.

It requires a strategic approach, including exploring repayment options, taking advantage of available incentives, and evaluating your income and expenses. By following the tips outlined in this article, borrowers can stay on course towards repaying their student loans, reducing their debt, and achieving their financial goals.

In conclusion, managing student loans can seem daunting, but it’s crucial to develop a strategic plan to stay on track with payments. The availability of a loan repayment pause for federal loans and various repayment options for private loans means that borrowers have flexibility when it comes to paying back their debt.

By following tips such as including loan payments in one’s budget, setting realistic savings goals, exploring repayment options, and enrolling in autopay, borrowers can reduce their debt and achieve their financial goals. It’s essential to remember that student loans leverage educational opportunity and should be considered good debt.

By using smart repayment strategies, borrowers can stay on top of their loans while achieving financial success.

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