No student loan interest: Take advantage of this opportunity!

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, suspended principal and interest payments on federally-held student loans from March 13 through September 30.

Right now, your interest and payments are suspended automatically. However, this only applies to federal loans, not private student loans. Other loans, such as those Federal Family Education Loan (FFEL) program are owned by private companies; however, those companies may choose to suspend your interest and payments, but are not required to do so. You should call your loan provider if you are not sure if your payments are suspended.

What does that mean for me?

If you have made payments since March 13, you are allowed to request a refund of those payments. However, if you continue to make payments, those payments will directly reduce the principal amount of the loan. Paying down the principal helps you to pay off your loan faster and save you a lot of money in interest payments.

Principal-Only Payments – shorten the length of a loan and save on interest.

Should I continue to pay or just save my money?

Right now many people are suffering financially and have difficulty making ends meet. Those people should save their money and focus on paying for necessities.

However, if you find that you are largely unaffected by the virus and are financially stable, then you should continue paying on your loans to help you pay them off sooner.

If you are somewhere in-between unaffected and not making ends meet, then you can simply make some smaller payments towards your debt. This will only help you in the long-run.

For example, your company cut your pay by 15% due to the downturn, therefore, rather than paying your $400 per month payment now, simply pay $100-200 per month. This can make a huge difference by the time your loans start charging your interest again.

Would making these interest-free payments really help?

Assume you have the average student loan debt of $32,731 at 4.29% interest rate. Under normal payment circumstances, you would be paying $336 per month for a decade. Your total amount paid would be $40,310 over 10 years.

Now, if you continued to make that payment of $336 now, without any interest, for April through September (6 months), you would lower your debt down to $30,715.

This can mean one of two things:

  1. lower your monthly payment down to $315 and pay a total of $37,827 over the 10 years. Saving you nearly $3,000.
  2. continue paying $336 and pay it off in 9 years with a total of $37,386. Saving you over $3,000.

NOTE: your monthly payment may go down, but it depends on your repayment program. Otherwise your monthly payment will be the same, but more of each payment goes to pay down the principal.


Pay what you are financially able to pay. If you are able to continue making your payments, it can save you a lot of money over the course of your loan.

If you pay more than your payments now it can only save you more money in the long run. However, pay whatever you can!

As Dave Ramsey encourages – get yourself out of debt as fast as possible!

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