Financial Moves to Make While Your Federal Student Loans Are Paused

Many Americans’ incomes have been negatively affected due to Covid-19 and the economy shutting down in most states. As a result, Congress passed a $2 trillion student loan stimulus bill that is pausing all federal student loans through September 2020.

During this time, no interest accrues on federal student loans and the months will count toward forgiveness. If your income has been cut during this time, this may be a temporary relief.

If you’re one of the lucky ones and still have a steady income right now, you may be wondering what to do now that your federal student loans are technically paused.

Regardless of your current situation, here are some key financial moves to make while your federal student loans are paused.

Start Beefing Up Your Savings

It’s always a good time to save, but after watching this year unfold so far I’d say we all should put a higher priority on building up more emergency savings. Experts recommend you have at least 3-6 months of expenses saved up. If you have a fluctuating income or a one-income household, I’d encourage you to save even more.

The global pandemic we’re in has changed so many things and I’m sure things will continue to change throughout the remainder of 2020. Cash is still king and it’s important to make sure you have enough of a cash cushion stashed away.

I’m not sure that federal student loan payments will ever be paused again so use this opportunity to your advantage and beef up your savings.

Get Ahead on a Bill

If you’re lucky enough to still have a steady and reliable income at this time, consider using the money that would have gone toward your student loans to get ahead on some bills. I’ll be honest, when everything started taking off in March and states were getting locked down, I never truly trusted the idea that people would receive rent/mortgage and bill assistance.

To my surprise, some assistance and relief efforts were made. Still, I don’t fully trust it when I see people posting stories on social media about a second stimulus check coming. There’s really no telling what will be decided in the future and I never like to get my hopes up and put faith in other people too much.

However, one thing you can do right now if you’re not paying on your student loans is create your own bill relief stash. This can be funds that you set aside outside of your emergency fund. It doesn’t hurt to get ahead on some important bills that you need to live comfortably.

Consider the most important expenses like your electric or gas bill, your grocery budget, and gas so you can get to work. If you have a budget you already know how much these things costs. Start by getting these bill payments up-to-date and challenge yourself to see if you can get a month or two ahead just for added security.

Federal student loan relief options have always been nice, but the recent student loan stimulus bill can help a lot of people right now. Click To Tweet

Pay on High-Interest Debt

If you’ve done the two things mentioned above already and have a comfortable amount saved, start looking at your high-interest debt. For the time being, your federal student loans are interest-free. Other types of debt like credit card debt, high-interest personal loans and car loans can become a financial burden if you don’t get them under control.

Consider putting some extra money on your debt to free up more money in your budget in the future. Paying off my high-interest consumer debt is one of the best decisions I could have made because I was able to release more of my cash flow.

Hopefully there are no more pandemics in the near future, but I do feel grateful that we didn’t have a ton of debt to juggle on top of what’s going on in the economy right now. Paying off debt – especially high-interest debt – sets you up for more financial success and stability even though we don’t know what the future holds.

Continue Making Student Loan Payments…With Caution

This option would be more of a final resort and something to consider only if you’ve taken all the steps mentioned above. I understand that some people may want to continue making payments on their student loans since more money will go toward interest.

Maybe you set a goal to pay off your loans by a certain date and want to use this as an opportunity to catch up and get ahead.

However, it’s important to make sure you have your basic needs met and adequate savings first. A lot of people are in survival mode right now and I totally get it. It’s important to be able to cover your basic needs at this time and if you can afford to do extra that’s great. However, if you can’t you shouldn’t feel bad.

Also, if you’re planning on student loan forgiveness, you probably shouldn’t consider paying your loans during this time anyway since it would be a waste of money.


Federal student loan relief options have always been nice, but the recent student loan stimulus bill can help a lot of people right now. There are many other financial moves you can make right now while you’re not required to pay on your federal student loans. Assess your current situation and financial needs to ensure you’re making the best decision for you and your family right now.