Why student loan borrowers may want to pay during payment suspension

Federal student loan repayments have been suspended until May 1, 2022. During this relief period (which only applies to federal student loans), interest isn’t accrued, collections attempts have been suspended, and payments towards loans are considered optional.


Although payments aren’t required, there’s a reason that student loan borrowers should consider making payments.


During the payment suspension, student loan servicers are required to report student loans as current, even when the borrower didn’t make a payment. These “payments” are not used in calculating the payments that made towards the borrower’s repayment plan.


Let’s consider the following. Someone has three monthly payments remaining on their repayment plan. For the next three months, they take advantage of the federal relief and don’t make payments. The student servicer will mark the payments as current with credit bureaus. But, as it relates to their repayment plan, no payment was actually made. So, the borrower still has to make three additional monthly payments before their repayment plan will officially end.


Although interest is not accruing, borrowers should still be concerned how it will affect their repayment. While repayments aren’t required, any payments made will be applied to the borrower’s principal first. This will help pay down the debt quicker, which will also result in lower interest costs.