Last Updated on August 25, 2023
In this blog post, we’ll be discussing how long student loans are on hold.
When a borrower is in default on their student loans, they can expect to have their loans placed on “collection status.” This means that the federal government will take over collection of the debt and attempt to collect it from you. However, there are certain periods of time where your student loan payments cannot be collected by the government—and one of these periods is when you qualify for forbearance.
Forbearance allows borrowers to stop making payments while they deal with financial issues or other circumstances that make it difficult for them to pay off their student loans. The goal of forbearance is to allow borrowers to get back on track with their finances so they can eventually resume paying off their debts.
How Long Are Student Loans On Hold?
How Long Are Student Loans On Hold
Payments are currently suspended, without interest, for most federal student loan borrowers through Aug. 31, 2022. This policy does not apply to private student loans.
Borrowers can still make payments to lower their debt during this period of suspended payments, called a forbearance. According to the latest federal data, a total of 500,000 borrowers (about 1.16% of all 42.9 million federal loan borrowers) continued making payments during the pause. Contact your servicer if you have further questions.
Make no mistake: This is a pause on payments, not forgiveness. Your debt will be waiting for you when repayment begins at the end of the forbearance, unless the policy changes again. While the Biden administration has said it plans to push for expedited $10,000 forgiveness for all federal borrowers, few observers believe such a bill could be moved through Congress quickly.
Until then, here’s how to decide what to do next.
If you want to pause payments
You don’t have to do anything to get a forbearance to stop student loan payments. Interest won’t continue to accrue, as it normally would.
A forbearance could give you breathing room to address other financial concerns.
If you are jobless or working reduced hours, a forbearance may free up cash to pay the rent and utilities or grocery bills. Even if your pay is unaffected, a forbearance could help you divert some money toward building an emergency fund or help you pay another, more pressing debt.
Usually forbearance is granted at the discretion of the servicer and interest will continue to build. In this case, the Education Department instructed all servicers to automatically place all loans into a forbearance without interest.
If you’re behind on your student loan payments (or get behind)
Federal loans with delinquent payments or defaulted loans will return to “good standing” status when payments start again on Sept. 1, 2022.
Default on federal loans happens when a payment is 270 days past due, sending your loan to collections and exposing you to damaged credit, garnished wages and seized tax refunds.
All collection activities are suspended through Aug. 31, 2022. You can get a refund for any forced student loan payments made since March 13, 2020. If your tax refund was seized before March 13, 2020, it will not be returned.
If your loans were already in forbearance, any interest that already accrued will still be added to your loan principal when your repayment begins, but during the current waiver no new interest will be calculated.
If you want to continue making payments
Borrowers might want to continue making payments on federal loans if they want to pay down their debt faster.
If you do continue making payments, you won’t pay any new interest on your loans during the forbearance. This 0% interest rate will save you money overall, even though your payment won’t be lower.
The full amount of your payment will be applied to the principal balance of your loan once all interest accrued prior to March 13 is paid.
Deciding whether or not to make a payment during this time will depend on your original repayment strategy:
- Those sticking to a standard repayment timeline (typically 10 years) could consider making payments. You likely won’t have much outstanding interest and additional payments can help you chip away at your principal during the break. To preserve your flexibility, we suggest opening a savings account and banking those monthly payments, then making a lump-sum payment against your highest-interest loan when repayment begins.
- Borrowers enrolled in income-driven repayment or planning to do so shouldn’t bother making payments now if the ultimate plan is to pay until the loans are forgiven — usually 20 or 25 years. If you want to pay off your loans sooner, then paying now could help you lower the total interest you owe on top of your principal.
- Borrowers seeking Public Service Loan Forgiveness do not need to make payments until at least Sept. 1, 2022. The months of automatic forbearance will count toward the 120 payments needed for forgiveness.
Contact your loan servicer with any questions about continuing or restarting payments during the forbearance period.
If your income has changed
If you experience a change in income and still want to keep your payments going, the best way to lower your payment to something more affordable is to apply for income-driven repayment. You’ll get a new payment that is based on your family size and a percentage of discretionary income, and it will be in effect even after relief has expired. You can apply online at studentaid.gov.
If you are already enrolled in an income-driven plan, make sure to update your income if it has changed due to the economic downturn.
If you were supposed to recertify your plan before Aug. 31, 2022, you’ll now have an additional time to do so. IDR recertification dates have been extended until at least March 2023. Borrowers will be notified when it is time to recertify. Temporarily, borrowers with direct loans can self-report their income when applying for or recertifying an IDR plan. That means you own’t have to submit tax documentation, but you will need to select “I’ll report my own income information” in Step 2 (Income Information) of the IDR application. This option ends Feb. 28.2023.
student loan forgiveness
If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program. Keep reading to see whether you might qualify.
To ensure you’re on the right track, you should submit a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF Form) annually or when you change employers. We’ll use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you’re on the right track as early as possible.
*This provision will be waived through October 31, 2022 as part of the limited PSLF waiver. Learn more.
Suspended Payments Count Toward PSLF and TEPSLF During the COVID-19 Administrative Forbearance
If you have a Direct Loan and work full-time for a qualifying employer during the payment suspension (administrative forbearance), then you will receive credit toward PSLF or TEPSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.
To see these qualifying payments reflected in your account, you must submit a PSLF form certifying your employment for the same period of time as the suspension. Your count of qualifying payments toward PSLF is officially updated only when you update your employment certifications.
Digital signatures from you or your employer must be hand-drawn (from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF form) to be accepted. Typed signatures, even if made to mimic a hand-drawn signature, or security certificate-based signatures are not accepted.
Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.
Have questions? Find out what loans qualify and get additional information about student loan flexibilities due to the COVID-19 emergency.
Qualifying Employer
Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:
- Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.
The following types of employers don’t qualify for PSLF:
- Labor unions
- Partisan political organizations
- For-profit organizations, including for-profit government contractors
Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.
Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.
Full-time Employment
For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.
If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.
If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.
Eligible Loans
Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.
Loans from these federal student loan programs don’t qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.
Student loans from private lenders do not qualify for PSLF.
Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver.
