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Student Loan Payment Pause extended

Updated: May 18, 2021

What it means to you and your taxes

The payment pause on federal student loans has been extended until September 2021.

Repayment of debts is necessary, but this continued windfall comes as a relief to many who have been financially impacted by the pandemic. This extension provides several opportunities. Namely, the ability to shift focus on a hurting area of your financial picture and the ability to make principal payments on your student debt.

If student loans are paused, should payments still be made? That’s a personal decision, but the extension sweetens the deal for those who are financially able to make payments. This is because 100% of the payment goes towards the loan’s principle, meaning payments have a greater effect on the debt than they typically would, helping the borrower pay off their loan even faster for the same payment amount.

Federal Student Loan Payment Pause

Other loose ends may take or share priority over the loan depending on personal preference. Until September 2021 payments are not required in full enabling a borrower to multitask and make the most of the pause. With a good plan, this is an excellent opportunity for borrowers.

Here are several options-

Build-up an Emergency Savings Account –

An emergency savings fund is a necessary financial tool. This pandemic has been a testament to that as many families have become dependent on theirs. It’s generally recommended that this fund amounts to 3-6 months of living expenses.

Pay Down Credit Card Debt –

Interest rates on credit card debt are significantly higher than the rate charged by the federal government on student loans. While student loans aren’t generating interest and payments aren’t mandatory, allocating some money towards credit card debt could be a good option and reduce the interest you pay each month. Not to mention it could help boost your Credit Score.

Organize a Trust and /or Will –

Use this downtime and the money freed up by the pause to organize a trust or will. There is something to be said about security and peace of mind that they could provide. Not to mention a will is essential to any financial plan.

Enroll in or Update your Disability Insurance –

This is important piece of any physician’s plan and this is the perfect time to revisit it if more coverage is needed to reflect an increased salary or any other significant change.

Contribute to Retirement-

Some student debts are so large they make it difficult for borrowers to contribute to their retirement fund. It’s important to contribute and ensure your financial future. This is the perfect opportunity to do just that if you’ve been unable to.

It’s important to ask yourself where your priorities are. The repayments of debt, bolstering wealth security, or funding your future are all worthy goals to accomplish especially amid this pandemic. What’s important is that you develop a plan and stick to it.


If a student loan payments were made throughout any part of 2020 those payments, if they qualify, may be eligible for student loan interest deductions. Unless payments were made in 2020 on student loans the freeze extension won’t have implications on how taxes are filed this Spring.

Let's keep working to make this year a better one.


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