Here’s what you should do before the student loan payment pause ends


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  • The payment pause for the federal student loan was extended one last time until December 31, 2022, the capitalized interest will be paused until July 1, 2023.
  • Until then, there are three smart steps you can take to lower your student loan balance.
  • One expert recommends paying off unpaid interest and putting as much money into your student loans as possible.

As part of his student loan forgiveness plan, President Biden announced in August that student loan payments would resume on January 1, 2023, but interest on federal student loans would not be capitalized until July 1, 2023.

Capitalized interest is unpaid interest that is added to your principal balance, typically after a period of forbearance or other type of non-payment. You will then be charged interest on this new, higher balance and not on the original amount you borrowed. That’s why you may find that your student loan balance is higher now than it was when you first took it out.

To reduce your balance as much as possible before resuming payments and capitalized interest, student loan expert Sonia Lewis, who has helped over 20,000 clients navigate government student loans through courses at The Student Loan Doctor, recommends three steps to do.

1. Don’t refinance your student loans

If you refinance your student loans with a private lender, you are not eligible for Biden’s student loan forgiveness. But, says Lewis, “what’s going to happen is that the commercial market is going to be really competitive and it’s going to try to convince people to refinance.”

Resist the temptation, says Lewis, adding, “I’m thinking of all the people just before the pandemic who swapped their loans from a federal lender and now they have no protection. You’re not going to get any of that money from Biden. Do not abandon your lender.”

2. Make payments before the break ends

With student loan interest rates locked at 0%, you have an opportunity to trim your principal balance before interest rates start to rise again in 2023. So, Lewis says, start making payments now if you can.

“As it was in the pandemic, if you were able to put money to invest in your student loans, it will help your credit score drastically because it essentially becomes an installment loan,” she says.

3. Pay off your unpaid interest before July 2023

For now, it’s a good idea to pay back your unpaid interest — or pay back as much as you can — so it doesn’t capitalize in July.

To do this, log into your state student loan account and find out how much unpaid interest you owe, or call your lender for the exact number, then create a plan for repayment.

For example, $1,000 in unpaid interest can affect your student loans:

  • After a period of forbearance or forbearance in which you have not made any payments, unpaid interest will be capitalized or added to your principal debt loan.
  • If you owe $10,000 at 5% interest over 10 years, you’ll pay a total of $2,728 in interest over the life of the loan.
  • If you add $1,000 to your $10,000 principal balance, you end up paying $4,001 in interest over the life of the loan.
  • If you pay $1,000 now while the capitalized interest is suspended, you will save $1,273 over the life of the loan.

Lewis says, “If I could jump into anyone’s piggy bank right now, I’d throw some of that money on their student loan debt.”


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