The federal loan pause is over. What can you do?

Time flies … especially when you're not making student loan payments.

It seems like just yesterday the federal government announced the first federal student loan payment pause and 0% interest as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Now that payment pause is over for federal student loan borrowers — meaning that student loan payments of principal and interest have restarted. And if you graduated recently and haven't started making payments yet, this could be a shock to your budget. Don't worry, we've got all the tools you need to set yourself up for success.

This doesn't have to be a huge "yikes" moment for you. The end of the federal student loan payment pause doesn't mean you have to start having higher monthly bills. You have some options that could help lower your monthly payments and add more cash to your budget all year long. You could even shorten the term of your loan — and be on your way to a permanent student loan break faster.

What the end of the payment pause means for you

If you have a qualified federal student loan you can likely expect the following:

• Interest has not accrued on your payments during the extended payment pause. So if you chose not to make payments, you won't be penalized.
• What if you continued to make payments on qualified federal student loans during the payment pause? Because of the 0% interest, the entire amount of your payment will be applied to the principal of your loan amount. That will help over the life of your loan and result in paying off your loan even sooner.
• The payment pause is expected to be automatic and your student loan servicer should make the necessary changes. It's a smart idea, though, to view your accounts to ensure they have been properly adjusted to reflect the pause in payments. The repayment period will resume the same way — automatically. Your loan servicer should send you notification that federal student loan repayment will start back up. If you are unsure who your loan servicer is, log into your account at studentaid.gov, visit your account dashboard and scroll down to the "My Loan Servicers" section.

If, however, you want a more permanent way to potentially lower your student loan payments and simplify your student loans, there's another option you may want to consider — refinancing.

Refinancing could free up money

Now that the payment pause is over, you may be looking at your student loan payments a little differently. Maybe you now realize that they take up too much of your budget. Or that they're hindering your future financial goals. Or maybe you just loved not paying them so much that you want to be permanently free of them. Refinancing could give you greater control of those payments — and your financial future. It could help you simplify your student loans into one payment, lower your monthly payments, and help you work toward debt relief. Here are more details on refinancing:

How student loan refinancing works

When you refinance your federal student loans^†, you're essentially combining them into a new loan with a new interest rate and/or new term from a private lender. Let's break down the details into bite-sized information:

• In order to refinance, you need to have a good credit history, steady income, and a solid record of paying back your student loans on time. If you want to take control of your student loans — and the rest of your financial life — refinancing may be a smart move for you.
• Should you get a refinance loan, the new terms might not only lower the amount you have to pay in interest each month, but also lower the total interest you'll pay over the term of the loan — and those savings could really add up.
• You should be aware that if you do decide to refinance a federal loan, you'll be swapping it for a private loan, which means you'll be relinquishing some of the benefits that come with federal loans, such as income-based repayment, loan forgiveness, and other programs.

Ready to take control of your student loan debt — and your financial future?

With the federal student loan payment pause ending, now's a great time to explore your options. Citizens is here to help you navigate your student lending options for today and the future. Make sure to visit our Student Loan Refinance page and learn more! For all the latest news on forbearance, check out our Forbearance hub.