How to prepare to pay off your student loan when the payment freeze ends: NPR

NPR’s Elissa Nadworny speaks with Betsy Mayotte of the Institute of Student Loan Advisors about the latest student loan hiatus extension and what borrowers can do to prepare for repayments.


This week, the Biden administration extended the pandemic pause in student loan repayments until May 1 of next year. The hiatus was previously scheduled to expire in just over a month. It’s a welcome relief for the more than 41 million Americans with federal student loan debt. They now have three more months to prepare to start making their payments. We called a few borrowers to get their feedback, including two in California that we’ll be hearing from here on out. This is Elsa Cavazos, who lives in Los Angeles and juggles multiple loans at the same time.

ELSA CAVAZOS: It’s very refreshing, like, oh thank goodness you know because I already have to make so many payments every month. And, I mean, I was mentally preparing to do that in January, you know, like, OK, here we go (laughs).

NADWORNY: We also spoke to Lauren Quinn, a teacher at an LA public school who has over $ 58,000 in student debt.

LAUREN QUINN: It’s just a kick in the road. We’re kind of already talking about, oh, how are we going to be able to pay that monthly bill again?

NADWORNY: So how should borrowers prepare? We called Betsy Mayotte for some advice. She is the founder of the Institute of Student Loan Advisors, a nonprofit organization that offers free advice to borrowers. And Betsy Betsy Mayotte is joining us now. Welcome.

BETSY MAYOTTE: Thank you for inviting me.

NADWORNY: So many questions from so many borrowers, so we’ll get right to it. You know, a year and nine months is a long time for a lot of borrowers who have taken a break from repaying these loans. With the extra 90 days, what should borrowers do right now before their first repayment?

MAYOTTE: Well, it depends on their financial situation. In addition to not being due in any payment, these loans benefit from an interest rate of 0%. So, for those borrowers who might be in a comfortable financial position, this might be the perfect time to pay off as much of that debt as possible at 0% interest. For those borrowers who are having financial difficulty preparing, the best thing to do is to make sure you know what type of loan they have. Get an idea of ​​what their payment will be after the payment break is over, and if they will need assistance, figure out which option will best suit their particular financial situation.

NADWORNY: The Education Data Initiative reports that the average federal student loan debt is around $ 36,000. What if someone can’t afford to start paying their upcoming monthly bill? What should they do?

MAYOTTE: Well luckily with the federal student loan program there are a lot of lower payment options. Some of them are based on balance. And some of them are based on the borrower’s income. Fortunately, there are some great tools out there to help borrowers determine not only how much their payment will be under each of these plans, but more importantly, how much they will be paying in the long run under each of these plans. . So one of them is the loan simulator on the Department of Education website, which is And then we also have a calculator that does this on our website, which is

NADWORNY: So basically you would put in what you know about your situation. Can that kind of help you get out of the monthly system and how much you would pay overall?

MAYOTTE: Right. And if you are someone who pursues loan forgiveness programs like the civil service loan forgiveness, these two calculators will also tell you if you would be ready for long term forgiveness, which is great. And you only have to enter the numbers once, and it spits it all out at you, so you can compare the different shots with each other right in front of you.

NADWORNY: You know, as we get closer and closer to repayment, we’re starting to see more and more student loan scams on social media and in your inbox. I wonder what are the tips to recognize these scams and how not to fall into the trap?

MAYOTTE: I’m so glad you brought this up. Student loan scams are one of the main reasons I founded the Institute of Student Loan Advisors, to try and give people some sort of, in quotes, “safe place to go” if they are looking for third-party advice. If someone contacts you and asks for your student loan account PIN or password, that’s a huge red flag. No legitimate student loan company will ever ask you this. In fact, under the recently passed STOP law, it is illegal for them to do so. But that doesn’t stop the crooks. If they promise you forgiveness from the start without really knowing anything about your situation, that’s another huge red flag.

NADWORNY: So a lot of the borrowers I’ve spoken with recently are still hopeful that President Biden will take action to write off student loans altogether. From my reports, it seems unlikely. What do you think about that? Is this a question that needs a major political solution in your opinion?

MAYOTTE: This question has become a kind of mess. First of all, I agree with you. The chances of a 100% loan forgiveness are slim to none. Here is the problem. And here’s why it’s, you know, the people that say, well, it would be so easy for him to do it. Student loans are not the problem. The problem is the cost of higher education. And it doesn’t necessarily make a lot of political sense to use US tax dollars to pay off student loan debt that will only pile up the next day. Forgiving student loans is like figuring out how to minimize bleeding, rather than figuring out how to prevent injury in the first place.

NADWORNY: I wonder, for borrowers who are listening right now, what’s next on their to-do list? What are the little things they need to be doing right now?

MAYOTTE: So despite the fact that the break has been extended, borrowers should take this opportunity to put things in order, so to speak. The first thing they need to do is make sure they know where all of their loans are because the one thing that is happening is that the services have changed. So make sure you know where your loans are. Federal loans, you can just log into, and it will tell you who holds your loans.

The next thing to do is to make sure that these loan holders have your correct communication information so email, post, phone number. Because when the break ends, there will be some very important information that they send to you that you want to see. And then the last thing is to figure out what your payment will be. Is it affordable? And if not, find out about the different payment options and which one is best for you, so that you are ready to submit this request as we get closer to the end – the real end of this break.

NADWORNY: It was Betsy Betsy Mayotte, founder of the Institute of Student Loan Advisors. Thank you very much for joining us, Betsy.

MAYOTTE: Thank you for having me. I had fun.

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