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Student Loan Relief Is Ending in 2022: Are You Ready?

It seems like student loans are always in the news lately. So, will the government wipe out your student loans or won’t they? Well . . . no one knows that answer yet. But what we do know now is the government is extending student loan relief again. And while you might be sitting there thinking, Hooray! Another six months of no student loan payments for me!—not so fast. Paying nothing on your debt for a long stretch of time isn’t such a great thing. We’ll dive into all the reasons why, but first, let’s dig into what’s going on with student loan relief.

What Is the Student Loan COVID Relief Extension?

Back at the start of the COVID-19 pandemic in March of 2020, the U.S. government stopped interest from stacking up on student loans and paused monthly payments. People who had lost their jobs or were furloughed were having a hard time making ends meet, so the government put off student loan payments (and interest!) in an effort to make things easier on folks. As time’s gone by, our economy and job growth has had ups and downs, and the student loan COVID relief has stuck around.

When Will Student Loan Relief End? 

Student loan relief will end January 31, 2022—so basically February.1 This means that after nearly two years of paused payments and no interest, regular payments will start up again. Like it or not, most borrowers will have their first payment due sometime in February 2022 (Happy Valentine’s Day to Sallie Mae).

Will Student Loan Relief Be Extended Again

If you believe the U.S. Department of Education, this is going to be the last extension of student loan COVID relief.2 But this latest extension is the fifth time it has been extended since March 2020—so you never know. Still, don’t bank on it being extended again, and keep paying on your loan like usual.

How to Prepare for the End of Student Loan Relief 

The good news here is you have about six months to prepare before student loan relief ends in 2022. So there’s really no excuse to be shocked and surprised when those payments hit again in the new year. Consider this your heads up now. And the truth is, you’ve got plenty of time to get your plan of action ready.

Start Paying Back Your Student Loans Now 

The best thing you can do to prepare for the end of student loan relief is to start making those payments now. We know, this sounds pretty weird: Why should you pay your student loan payments if they’re on pause? Because the interest alone will eat you alive. And right now, you can keep making those payments and not pay any interest. None. Zilch. Your payment goes directly toward knocking down the principal amount—that’s huge. Now is the time to keep up with the payments and make some serious progress on paying toward your student loans!

Get a new student loan rate from a Ramsey-trusted company in 10 minutes.

But nobody does that, you say? Not true.

Our State of Personal Finance study found that 57% of those with student loan debt have kept making payments on their student loans—even though the government suspended payments for all those months. Smart move there!

So, how would someone who kept making payments this whole time stack up next to someone who didn’t? Take a look:

Let’s say your student loans add up to be the average student loan debt of $38,792.3 You’ve also got the average interest rate of 5.8%, and your minimum payment each month is $393.4,5 If you haven’t made any payments since March 2020, the good news is, your loan hasn’t gotten any bigger (thanks to no interest). But the bad news is, your loan is still sitting at nearly 40 grand. It’s two years later and you’ve made no real progress.

But if you had kept on making those $393 payments and took advantage of the lack of interest spread out over 22 months, your principal student loan balance would be $30,146 come January 31, 2022. That’s 8,646 bucks you would have shaved off and you’d almost be in the 20-grand range!

There’s no shame here, though. You can’t go back and live in the past. All you can do is make better decisions in the future. Maybe you were out of work in 2020 and needed every last dollar to just survive—but 2021 is looking a lot better. Now is the time to get back on the horse and see how much progress you can make on your student loan debt over the next six months.

Paying that $393 minimum payment now will lower your student loan down to $36,434 by the time the interest kicks back in come January. Once that interest does pick up again, it’s going to be a lot nicer to pay 5.8% interest on $36,434 instead of almost $40,000.

Budget for Your Student Loan Payment 

If you haven’t been paying on your student loans since early 2020, now is the time to start getting your budget ready to handle that $400 payment again. That might mean you need to buckle down and stop the impulse buys, cut back on eating out, or give up your 15 beloved streaming services (yeah, those suckers add up real fast). There are plenty of ways to cut back and free up some extra cash in your budget—you just have to look for them.

If You Have Other Types of Debt Plus Your Student Loan Debt 

With the debt snowball, you pay off your debts from smallest to largest. So, if you have other debts (like a car loan) that are less than the amount of your student loan debt, you need to focus on paying off those small debts first.

Here’s how that plays out: Take that minimum payment you’d be paying on student loans right now and start knocking out your smaller debts while your student loan payments are paused. Once you totally pay off a debt, take the amount you were paying on it and add that to the amount you’ll pay on the next debt. You’re adding to your snowball and packing it with more cash to knock out your debts one by one as you go.

If You Only Have Student Loan Debt 

If you’re in Baby Step 2 (pay off all debt except the house) and the only debt you have is this student loan, then you need to get serious about paying it off. Don’t keep it around like it’s a pet. Get rid of this thing as fast as you can. That means you should pour any extra money you’ve got onto this pile of debt until it’s out of your life for good.

Make Sure Your Information Is Correct 

This feels like a weird thing, but if you haven’t paid on your student loans in almost two years, you’d better make sure your loan servicer has your correct information. A lot can change in two years. Did you get married? Change your last name? Move to a new place? It’s a good idea to double-check that your loan servicer has all your correct info on hand before that first payment is due.

Should I Take Advantage of the Student Loan Relief and Not Pay My Student Loans?

Oh, and don’t hold off on paying back your student loans because you’re banking on your loans to be canceled. Even though President Biden campaigned on that very (massive) promise, it’s been crickets on that front as far as any sweeping cancellation goes. Although, he did wipe out $5.8 billion in student loan debt for borrowers with a total and permanent disability.6 Still, it’s clear (for now at least) that the president likes targeted forgiveness instead of making it happen for every single borrower across the board. He even conveniently left student loan cancellation out of his budget for the year.7 So quit hoping for more magical money to come from the skyget these things paid off.

Should I Refinance My Student Loans? 

The simple answer is . . . maybe. Refinancing your student loans could be the right thing for you, but it depends on your specific situation. Here are the only times when we recommend refinancing your student loans:

  • When it’s 100% free to make the change
  • When you can keep a fixed rate or swap a variable rate with a fixed rate
  • When you don’t have to sign up for a longer repayment period
  • When your new interest rate ends up being lower than your current interest rate

Refinancing your student loans could help you gain some major traction to pay off that debt for good. That’s something that can actually help you make progress in the right direction—not just kick the can farther down the road like the government is doing here.

See if refinancing your student loans is the right thing for you—it costs you nothing to apply, and it only takes about 10 minutes. Get your new rate today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Get Rid of Your Student Loans Faster!

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Get Rid of Your Student Loans Faster!

Find a new, lower interest rate in about 10 minutes.
Learn How

Get Rid of Your Student Loans Faster!

Find a new, lower interest rate in about 10 minutes.
Learn How