Student Loan Update

Dear Dr. Per Cap:

I stopped paying on my student loans during the pandemic. Is it true that I must resume making payments soon?


Professional Student

Dear Professional Student,

If you have federal student loans as opposed to private student loans, which more than 90% are, then yes. Beginning August 30, the freeze on federal student loan payments and interest will end.

The historic student debt forbearance, which started as one of many efforts to reduce financial hardships caused by COVID, was a welcome break for many current and former college students. As a result, more than 40 million borrowers haven’t had to make any federal student loan payments, while no interest has accrued on those loans in over three years. Moreover, all federal student loan accounts, even those that were in default, were placed in good standing.

The freeze has been extended nine times since March of 2020. But a condition of the new debt-ceiling deal that had lawmakers in Washington deadlocked for weeks, requires student loan borrowers to get back on track with payments.

Because only about 1% of borrowers kept making student loan payments during the payment freeze, there’s bound to be some payment shock going forward. Therefore, start factoring these costs into your monthly budget sooner rather than later.

It’s also a good idea to sign into your student loan account online or reach out to your federal student loan servicer to check on the status of your account, your payment amounts, and due dates. The August 30 start date might also not directly apply to you, depending on your payment schedule before the pause. So, confirm when your first new payment is due.

Another important consideration is the student loan forgiveness plan that’s been on and off the table for the last two years. The proposed plan, which offers up to $10,000 of federal student loan debt relief and up to $20,000 of relief if you received Pell Grants, is currently off the table.

However, all eyes are on the Supreme Court, which is expected to issue a ruling on the plan this summer. Anything goes then, so don’t bank on your student loans being wiped clean just yet.

Another interesting development beginning next year pertains to a new law passed in late 2022 that will allow employers to match an employee’s student loan payments with 401(k) contributions. That’s a nifty way for some borrowers to pay down their student loans, while at the same time investing for retirement.

Since the beginning of the year, there have also been some big changes to income-driven student loan repayment plans which can lower payments for some borrowers.

Take some time to review your options over the next month or so. You’ve got time to prepare, so take advantage.


Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit To send a question to Dr. Per Cap, email