Is It Worth It to Make Payments During the Student Loan Freeze?

March 4, 2021

Back in March 2020, the CARES Act put a pause on federally held student loans. For the first time in history, eligible borrowers were not required to make their monthly payments. At the same time, the interest rate for these loans has been set at 0%; so even though you may not be making payments, your balance hasn’t grown. Most importantly, President Biden recently announced that this relief will be extended through September 30, 2021.

But even though payments are on pause, borrowers can still put money toward their loans. In fact, it may be wise to make payments while these relief measures are still in effect, depending on your overall financial status, repayment goals, and the type of loans you have.

Whether you’re a borrower yourself, or an employer helping your teams navigate their student debt repayment, here are some factors to consider when deciding whether to make a payment during the freeze.

First, Double Check: Are Your Loans Federally Held?

The pause on payments and interest only applies to federally held loans. That means that every loan that is not “federally held” will be excluded from this relief, and still requires monthly payments. And unfortunately, not all federal loans fall under the federally held umbrella.

Federal Direct loans and some FFEL, Perkins, and Parent PLUS loans are issued by the U.S. Department of Education and therefore considered to be “federally held.” If you took out loans after 2010, they’re probably considered federally held.

Still not sure what type of federal student loan you have? We can help. Through the Summer app, you can sync your loans, determine if your loans are eligible for the payment freeze, and get the info you need to navigate the relief extension. It’ll only take a few minutes, but could impact your loan situation in a big way.

What are the Pros of Making Payments Right Now?

Of course, this relief period was enacted for an important reason. Many borrowers have seen their incomes reduced due to the pandemic, and are unable to make payments right now. But if you do determine that making payments will fit with your budget, priorities, and repayment plan, then this path may yield multiple benefits.

You’ll get a head start on your repayment timeline.

This may seem like a no-brainer, but it’s worth mentioning: Continuing to make payments will bring down your total balance. Yes, we know—groundbreaking.

If you know that you want to pay off your loans sooner rather than later, paying now will bring you that much closer to your goal.

Zero interest? Interesting …

Interest is currently frozen at 0%. If you play your cards right, this may help your dollars go further—or even give you the chance to reduce the amount of interest you’ll pay later.

Usually a portion of your payments goes toward any interest that has accumulated that month. But now that there isn’t any added interest, 100% of your payment will pay down your balance.

Making payments now will be especially advantageous if you did not accumulate any unpaid interest prior to March 2020. Without that extra interest weighing you down, any cash you put toward your loan will go directly towards the principal. The amount you pay in interest is based on a percentage of your principal, so paying down the principal will also reduce the amount of interest you’ll accumulate each month after the relief period ends.

What are the Cons of Making Payments Right Now?

In this situation, the age-old proverb rings true: Just because you can, doesn’t necessarily mean you should. Making payments during this relief period won’t be the right move for everyone.

If you’re on track for forgiveness, these $0 payments will bring you closer to debt-free living.

For borrowers who are enrolled in certain relief or forgiveness plans, making payments right now may not be in your best interest.

Under this current relief extension, each “payment” of $0 counts toward the total payment amount needed to qualify for some forgiveness programs. For example, if you’re enrolled in PSLF and need ten years of qualifying payments, each month you don’t pay now equals one less month you’ll need to pay later on.

If you’re on a path to forgiveness under these programs, it’s best to let these zero dollar payments work to your advantage:

By the end of this relief period, borrowers enrolled in these programs will be a year and a half closer to their forgiveness date, without spending a dime. That’s basically free money in your pocket. And who wants to miss out on that?

Don’t Underestimate the Importance of Extra Security Right Now.

After everything that’s gone down in the last year, we don’t blame you if you would rather save than spend. It’s totally up to you to make the best choice for your own situation.

If you’re hesitant to make a payment just yet, here’s one route you could take: over the coming months, put the amount you would normally pay each month into your savings account. Then, closer to the end of the payment freeze, make a lump sum payment totaling the amount you would have paid under normal circumstances (or more, or less). That way, you’d still have access to that money in the meantimejust in case.

This is Basically a “Choose Your Own Adventure”

If you do decide to make payments during the relief period, keep in mind that they don’t have to be monthly. In fact, this may be an opportunity to turn your repayment plan into your own “choose your own adventure” story.

Without the expectation for borrowers to adhere to a certain payment schedule or amount, you’re free to determine what works best for you. If you do decide to contribute towards your loans, you can do so on your own schedule.

You can pay monthly. Or you could pay in one lump sum. Or you could pay when you just happen to have extra cash on hand. Or you don’t have to pay at all. It’s really up to you.

And you don’t have to decide now. Remember, you have until October 1st before regular payments resume.

But You Don’t Really Have to do Anything. Really.

If the idea of putting money towards your loans is stressing you out, then you don’t need to do it. It’s as simple as that. Any choice is validand that includes no choice at all.

Regardless of whether you decide to pay or pause, we’re in your corner and here to help. We’re looking forward to making it through this together.

Questions? Reach out at

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