How to get your finances ready for the end of the student loan payments pause

Federal student loan borrowers will have to start repaying their loans again as of Jan. 1, 2023

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Here's what you should know to be ready when student loan payments resume in 2023. (Shutterstock)

The end of the student loan payment pause appears to be in sight. The Department of Education has said the seventh extension, announced on Aug. 24, will be the last.

Federal student loan borrowers will need to resume making payments as of Jan. 1, 2023. Let’s look at some steps you can take in the coming months to prepare.

Private student loans aren’t included in the payment pause or student loan forgiveness programs. Refinancing can be a great way to get a lower interest rate. Credible makes it easy to compare student loan refinance rates from multiple lenders.

When will student loan payments resume?

You can expect to get your first post-pause federal student loan bill after Jan. 1, 2023. Loan servicers are supposed to send borrowers billing statements or a notice at least 21 days before their first payments are due.

However, you don’t have to wait to hear from your servicer. You can log into your financial aid account at and find out key information about your loan ahead of the payment pause deadline.

3 steps to take now before the payment pause ends

The federal government first instituted the pause, and set student loan interest rates to 0%, in March 2020. The move was intended to provide financial relief to Americans struggling with the pandemic’s impact on their wallets.

Now the breather that was originally intended to last 60 days has stretched on for more than two years, and many borrowers may be unprepared to start repaying their loans again in January.

The average federal student loan payment is about $260 per month, according to the Federal Reserve. But about 60% of borrowers didn’t make payments between August 2020 and December 2021, the Fed notes, and they may not be ready to resume payments once COVID forbearance ends.

Here are steps you can take to prepare to begin repaying your federal student loans next year:

1. Understand your position

Check into all possible avenues of student loan forgiveness — there are multiple options. In addition to the $10,000 of forgiveness borrowers with incomes under $125,000 may qualify for, you may be able to qualify for:

  • An extra $10,000 ($20,000 total) if you received a Pell Grant while in school.
  • Public Service Loan forgiveness and other employment-related forgiveness programs for working in certain roles in the government or for a qualifying nonprofit or health organization.
  • Income-driven repayment plan forgiveness, if you’ve made 20 years of on-time payments on an IDR.
  • Disability discharge if you become totally and permanently disabled.

Be sure you understand exactly how much you owe, what your interest rate will be when it resets from 0%, and what your monthly payment may look like. If you know the first two pieces of information, you can use a student loan calculator to get an idea of your monthly payment.

2. Check your payment plan

A 10-year repayment term is the default for all federal student loans. If yours first came due during the pandemic pause, when payments resume you’ll likely be on that plan.

Check into an income-driven repayment plan if you’re still on the 10-year standard one. Or, if you were on an IDR before the payment pause, your circumstances may have changed. Income changes can affect the IDR you choose and how much your payment will be.

It’s a good idea to explore your options to ensure you’re on a plan that will set you up for success when payments resume.

3. Make room in your budget now

If you’ve never had a budget, or have one but haven’t updated it in a while, the next few months are a good time to work on budgeting.

Add up all your monthly expenses, both those you must pay every month — like housing costs, insurance, and basic necessities — and discretionary spending. Look for opportunities to set aside the amount you’ll need for your student loan payments.

You may have to trim from multiple areas of your budget, or find ways to increase your income.

What to do if you won’t be able to afford your student loan payments

If even an IDR won’t be enough help to make your student loan payments manageable come January, it may be time to consider other options. It’s important to avoid delinquency, as federal student loans usually can’t be discharged by bankruptcy.

Look into consolidating your federal student loans into a single Direct Consolidation Loan. This will allow you to have just one payment, and one interest rate to keep track of. It can also allow you to extend your repayment term, which can give you a lower monthly payment. 

Just keep in mind that your interest rate may not be lower than the ones you have now, as it will be the weighted average of your previous interest rates. And extending your repayment term will increase the total interest you’ll pay over the life of the loan.

Refinancing into a private student loan is another option. It may be most helpful for:

  • People with private student loans, which don’t qualify for IDRs or forgiveness.
  • Federal student loan borrowers with good credit who don’t qualify for forgiveness and who want a lower interest rate.
  • People who want to pay off their student loans faster.

With Credible, you can easily compare student loan refinance rates from multiple lenders in minutes — without affecting your credit.