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So Your Student Loans Are Frozen (Again)!? Here’s What To Do:

January 2, 2022

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Student Loan Freeze Extended until May 2022!

Did you hear the latest rumor about your student loans? I’m sure you heard! If you didn’t – the breaking news is that President Biden extended the student loan repayment freeze through May 2022. Originally started in 2020, the freeze on student loan principal and interest has been extended several times. 

Important to note that this pause on paying the principal or interest of your student loans applies if and only if you have Federal Student Loans  – it does not include private loans, those that have been refinanced off the Federal books, Federal Family Education Loans or Perkins loans. 

Now, if you are shaking your head or steaming from the ears because you, not knowing the pandemic and the student loan interest freeze were coming, refinanced in the past for better terms, interest rate and now your loans are privately held – hang in there – there’s advice for you a little later on. 

If you are part of the Income Based Repayment or Federal Public Student Loan Forgiveness Programs, each month that passes during the freeze counts towards your tally of months paid, even if you don’t pay a cent. 

The freeze on student loan repayment, as it’s been called, has three benefits if you currently owe on student loans or have them in default – 1. No interest is due at this time 2. No principal payments are required and 3. Collections on federal student loans are on pause, still. 

So, this isn’t an entirely new situation, but it is, with headlines and posts about this extension, a really great opportunity to re-evaluate your approach as we launch into a new year!

Ultimately it comes down to one and only one thing that truly matters in the evaluation of what to do with this freeze – I’ll share it at the end of the episode along with a great, completely free resource to help you with that one simple thing. 

Short-Term Money Goals

What to do heavily depends on the remainder of your financial situation & being clear on your goals. Most moms know, in general, what they want to be doing financially. Vague things like “save more”, “have less debt”, and “have money left over at the end of the month” or “stop feeling guilty about spending money”… but those that thrive and have specific direction for their money have specific and measurable financial goals.

When you have a clear goal like “Save $10,000 by March for Emergencies” you are more likely to take action. It’s something you can break down into smaller milestones that you can celebrate and clearly measure along the way.

Tying your financial goal to a specific event or celebration can be powerful. Maybe you want to “Be Debt Free by my 40th Birthday in April 2023” – YES! Using a birthday, vacation, anniversary or similar to mark the deadline can make it more fun. 

If you are wanting to have money left over at the month you could make your specific goal to start living in abundance, spending freely, and having extra money to put to debt and into savings (or to spend, if that’s what you are wanting to do). 

If you’ve been feeling guilty about spending the money that you have, work on healing your mindset around money, starting to manifest more of it and feel supported by it. These last two goals are “softer” and don’t have associated dollar amounts and deadlines because, honestly, healing your relationship and mindset around money is an ongoing journey that isn’t going to end in March of next year. 

In order to decide what the best next move is for you during these coming months of the extended student loan repayment freeze, clear and measurable goals with a specific deadline and plans for celebrating your victory are key. 

Now, let’s be clear, life doesn’t always… ok, it doesn’t ever seem to go exactly according to the plans and goals that we painstakingly put together, especially this time of year. Be highly dedicated to these goals and hold loosely to the specific parameters when life happens or if you veer off course. Give grace while holding yourself accountable. Work with your partner towards these goals! The first and most important step clearly defining your short-term goals. 

Write them down. Paste them places you’ll see them. Go about the business of making those goals a reality! 

Should I pay on my student loans during the freeze?

Let’s be honest, you clicked play on this episode because you are trying to decide if you should be paying on your student loans during this extension of the freeze. You were gearing up to start paying if you’d stopped, and more-than-likely you were dreading it. Suddenly the landscape changes and you are wondering – to keep doing what you’ve been doing, switch it up, pay some, pay nothing? What’s the best choice for you? 

The next step is deciding if you are going to pay on your student loans during this time – whether that would be a restart for you or continuing to make those payments. In order to decide this, look at your overall financial situation and your goals & ask yourself – Does paying on these student loans help me to get to my specific short-term money goal sooner or will it slow me down? 

If things aren’t going so well…

If you are having a tough time making ends meet, paying all the bills month-by-month, take advantage of the respite and get things in order in other areas of your finances. Focus on fixed and essential expenses and consistently paying these month-after-month. If you can create some margin in your budget, start to pay off other loans or fund your OMG fund, whatever floats your boat and makes you feel more prepared to start paying on those loans. 

If you are behind on your student loans at this time…

During this time, if you have student loans that are in default – make a point to catch ‘em up – truly, you’ll get more bang for your buck during this time because 100% of your payments are going to go to existing fees, past interest and principle, not having to worry about current interest. 

If you are current on your student loans right now…

If you are caught up with your student loans – first of all – pat yourself on the back. It’s been a topsy turvy couple of years and that’s worth celebrating! 

Then, once you are done doing your happy dance, hold up your student loan payments next to your short-term money goals. 

Are you motivated to get those loans g.o.n.e.? If debt freedom, including those pesky student loans is a part of your financial plan, make your payments and… if you can swing it, instead of sending the minimums, sending maximum payments!

If you, instead, have a pressing goal for saving or have set your sights on eliminating higher-interest debt, you could pause those payments to the student loans and turn your laser beams to the other interest rates. 

What if your student loans are private?

Now – let’s chat a *little* on what to do if your student loans are private – other than kicking yourself for not being in the camp of not having to pay interest during these months – use that anger for good, instead of evil. 

If you have refinanced and privatized your student loans in the past – this can make you more resentful of the individuals benefiting from this ongoing defferment. I see you. You’ve been paying this whole time! I hear you. That’s super frustrating! 

It’s time to re-evaluate. Do you have a plan for debt reduction or elimination? What’s your current timeline for getting those student loans out of your life? Do you feel good about that or would you like to do something to kick it into higher gear? 

This applies to you regardless:

Regardless of your situation – whether you benefit from this pause or not – it’s a great reminder to take a look at your finances. Sit down with your spouse. Use the Quarterly Money Meeting Checklist – it’s free and I designed it to facilitate money conversations without fighting with your spouse. It will help you to take an inventory and answer questions like:

Where are we financially?

Are we working together towards specific goals?

What are our specific goals?

Where do we go from here?

Do we both have an equal vote?

Do we need to shift what we are focusing on?

Do we need to redistribute who is doing what money-wise in our home? 

In the Money Meeting Checklist you’ll find some softer questions like:

Are we having fun with money?

Are we living and spending in alignment with our values?

What are our big, bold dreams with money?

Are we headed towards a life that we love?

Here’s the thing about this extension of the freeze – use it as a catalyst to have the conversations. The worst thing that you can do money-wise is to do what you’ve been doing just because you aren’t willing to look, to set goals, to evaluate where you are, and to actively choose. 

Remember when I told you earlier that what you do with this information or at any turning point financially comes down to one simple thing?

That one thing… is to decide.

Whatever you decide to do – decide and mean it. Make the choice – it’s active! It’s on you! No one is going to do it for you. 

Once you make the choice, pursue the steps to make that choice have the biggest impact to you and your family financially. 

Take advantage of this reprieve either by making payments and progress on yours student loans or turning your attention to savings, debt reduction or evnjoying your money elsewhere – no guilt, no shame – just confidence in your decisions and living in alignment with what matters most to you. 

Leverage the tools at your disposal like that Free Money Meeting Checklist I mentioned – its linked in the show notes – and have those conversation with your spouse about where you are going financially. Getting on the same page with money dreams, goals, and the logistics of running your households is truly the sexiest thing you could do. No, seriously, collaboration and communication with your spouse are the new currency for connection and connected couples are sexier to their partners! 

I’m so glad you took the time to learn more about the juiciest gossip on the street – and the sexiest subject in the wide world of personal finance – federally insured student loans… 

and hey, if you haven’t, pop on over to itunes and leave a review – I love to hear what you think of the show! If this episode was helpful to you – send it to another momma who needs it. Keep on taking one step at a time towards your best, most beautiful, fulfilled as a mother life. You got this & I got you!

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