San Francisco – During the pandemic, when a record number of Americans lost their jobs, at least many people were able to take a break to pay off their federal student loans. In March 2020, the US Department of Education stopped requiring payments on loans and suspended all interest on loans.

But there are only a few months left before borrowers have to resume their payments and interest rates are reset: The Department of Education has announced that student loan repayments will begin on January 31, 2022.

This grace period has given people the opportunity to bypass the interest rates that force them to repay loans for life – if they have extra cash to spare.

On the other hand, people who have lost their jobs may not be able to regain the level, or any level, of payment they could afford before the pandemic. These people may have purchased or joined an income-based payment plan – their debt may be forgiven after 20 or 25 years of payment on such a plan.

“There are several options to continue some sort of break on your loans, but not with interest relief,” said Mark Kantrowitz, a student loans expert. “In some cases, interest may be covered. These include postponement, such as postponing economic hardship, and postponing unemployment. There are also general abstentions.”

Kantrowitz also recommends borrowers use this break period to pay off higher interest debt, like credit cards, while they can.

Student loan repayments are a hot topic right now on social media as President Joe Biden announced improvements to the federal student loan waiver program.

A growing movement of people, some of whom are members of a group called “The debt collective“categorically refuse to repay their loans. The members of this” first union of debtors in the country “aim to” build power with debt as leverage. ”

In practice, this amounts to campaigning and organizing in favor of “the cancellation and renegotiation of debts, access to public goods (education, health, housing, etc.), anti-racist economic policies, etc.). to their website.

But failure to pay federal student loans can have serious consequences, Kantrowitz said. These include wage garnishment, downing on your home, removal of business licenses, bad credit, and more.

“The government gets its money one way or another,” Kantrowitz warned. “They can also, by court order, issue a direct debit to seize your bank accounts or brokerage accounts.”

The unemployed were and still are so strapped for cash to pay their bills during the pandemic that abusive lending practices have proliferated in recent months. Payday loans and auto title loans continue to imprison desperate people whose debts mount as they try to stay afloat.

And Americans are more in debt than ever: household debt hit a record $ 14.6 trillion last spring according to the Federal Reserve.

So what can you do before the required payments resume?

Kantrowitz said people on income-oriented payment plans or applying for a public student loan forgiveness should not pay their loans during the hiatus.

“While it is true that if you make payments it goes entirely to the principal, there are other things you can do with the money that can put you in a better position, for example, if you don’t. don’t already have an emergency fund, or you have a small emergency fund, you could build it or strengthen it, because you might have a job now, but who knows what’s going to happen in a month or two, “he said.