in our free newsletter.

Thousands benefit from our email every week.

Some shouldn’t bother making payments now

The pause on student loan payments and interest has been extended multiple times since it was first established under the Trump administration in March 2020. For cash-strapped grads, it's been a godsend.

Mark Kantrowitz, student loans expert and author and publisher of, says his analysis of U.S. Department of Education data shows that, in reality, only 1.2% of borrowers have been making payments during forbearance.

However, he admits it’s unclear whether that figure represents borrowers regularly keeping up with their monthly payments, or borrowers who have made at least one payment during the freeze.

Borrowers who have been making payments during the freeze are taking advantage of the 0% interest rate to chip away at their debt and potentially reduce the interest they’ll owe later. But that strategy has its drawbacks.

“I don't recommend doing that in a couple of circumstances,” says Kantrowitz. “If you're working toward loan forgiveness, you don't want to make payments that aren't required because that reduces the amount of forgiveness you will ultimately receive.”

He adds that borrowers should also prioritize forms of higher interest debt at this time (like credit cards), bulk up their emergency fund and maximize their 401(k) contributions.

Lauryn Williams, founder of financial planning firm Worth Winning in Dallas, Texas, says that if you’re on an income-driven repayment plan and you owe more money than you make, paying down your student loans during the freeze is the equivalent of “flushing money down the toilet.”

The federal government offers four income-driven repayment plans, which can see your remaining debt forgiven after making qualifying payments for 10 to 25 years.

Credible is a website that helps you save on interest. Interested? Use Credible to shop around and find the best rate for you on a variety of personal loan products, including student loan refinancing and personal loans for debt consolidation.

Find your rate

Using the pause to sort your priorities

Williams believes most borrowers may have been focusing on other important goals, such as saving for a down payment on a home or increasing their overall financial stability.

Student success educator Lamesha Brown, based in St. Cloud, Minnesota, says she and her husband were able to purchase a home for her sister-in-law in Alabama. They’ve since converted the house into a residence for Section 8 voucher users, opened a Roth IRA account and were able to purchase a condo.

Brown graduated with a PhD in college student affairs administration from the University of Georgia in 2019 and has almost $32,000 in student debt from her master’s and doctoral degrees.

She says she grew up with little financial literacy. As a result, it was important for her to concentrate on other financial goals, especially as a woman of color from a low-income, single-parent household.

“I prioritize these goals, because I have to, and it matters for my family. It matters for those who come after me.”

Brown added that while she can afford to make student loan payments at this time, she chooses not to.

“As I've navigated my adulthood, I've worked to increase my financial literacy to determine ways that I can create some generational wealth.”

The end of the pause could be painful

As Kantrowitz and Williams both expected, the Biden administration extended the freeze again when it announced its student loan forgiveness plan.

The payment pause has been extended for one final time until Dec. 31. But even with this extension, some borrowers may still be unprepared to resume repayments.

“I think that there's going to be real trauma related to … the loan, about the way they've been treated,” Williams says.

With just $10,000 of forgiveness (and $20,000 for Pell Grant recipients) on the table, the relief may not quite cut it for some — especially those who recently found out they’re ineligible for forgiveness entirely.

The Federal Reserve acknowledged in May that some borrowers may be unprepared for payments to resume, citing rising delinquency and interest rates in the second half of 2021.

And the New York Fed more recently reported that total household debt for Americans soared over the second quarter of 2022, with credit card balances seeing their biggest jump in over 20 years.

Sign up for Credit Sesame and see everything your credit score can do for you, find the best interest rates, and save more money at every step of the way.

Get Started—100% Free

A lack of education on student loans

Williams says many young borrowers may not have grasped how student loans would affect them over the long term.

“Imagine being 17 years old … you're just signing on the dotted line, because you've finished high school. And the next step, as America tells us, is to go to college.”

She adds that there's also a lack of education around how different types of financial aid work.

“I would say the biggest thing is not to ignore your student loans, to get a plan in place,” advises Williams, explaining that students need to look into the various income-based repayment plans.

Coleman explains that many students may not understand what compounding interest is or even that higher education isn’t necessarily the best route for everyone.

“When I [was in college], the information that they gave you was this huge packet of information, and they’d say, ‘Here read this.’ And that's essentially a contract.”

However, the student loan pause gave Coleman the opportunity to invest in cryptocurrency, get more technical education and start building a mindfulness program for neurodivergent people of color.

Coleman also testified in front of the Department of Education earlier this year about her negative experience with the University of Phoenix, which made her deeply regret her decision to attend.

“I think that the pause really allowed me to be able to kind of step back and see the full picture, and if there was a collective way to be able to handle this situation,” she adds. “We can start to move the needle on the way that some of these programs and institutions are being governed and handled.”

What's best way to use a personal loan?

A personal loan can be used to consolidate debt, take a much-needed vacation or complete that home improvement project.

With Credible, get a personal loan quote from vetted lenders in minutes - for free. There are no hidden fees and you can get prequalified in just three minutes.

Don’t let a lack of cash hold you back.

What to Read Next


The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.