Americans who were worried about the return of federal student loan payments got a big gift from President Joe Biden just before Christmas.
He announced that the pandemic’s long student loan freeze for roughly 42 million borrowers would be extended yet again, this time through . Loan payments, interest and collections would remain on hold until then. They had been scheduled to resume in February.
„We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,“ Biden said in a statement.
The president’s campaign pledge to forgive thousands in student debt for every borrower remains a big question. So for now, it’s smart to use the new reprieve to clear out as much of that debt as you can. Here are three ways to do it.
1. Make payments, even though you don’t have to
While it might be tempting to remain „on break“ from your student loans until May, continuing your regular payments – and even paying more than your usual minimum – is a wise move, if you can afford it.
„The pause on student loan payments will help 41 million borrowers save $5 billion per month,“ says Biden’s Education Department, referring to the savings from the current 0% interest on federal student loans.
Any payments you make now will go entirely toward the principal of your loan and help knock down your balance. When student loan debt was first frozen in March of last year, the typical balance was $20,000 
to $24,999, according to Federal Reserve data.
Resuming your payments early is probably out of the question if you’re dealing with other debts, like if you ran up your credit cards during a period of unemployment last year. You could use the next few months to tame those debts with the help of a lower-interest debt consolidation loan.
2. Seek a new repayment plan
You could clear your student loan debt faster by switching up your current payment plan, particularly if the pandemic cut your income and it still hasn’t come back.
„We will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan,“ says Education Secretary Miguel Cardona, in a news release.
Income-driven plans allow borrowers to make more affordable payments, based on what they earn. After 20 or 25 years of regular payments under an income-driven plan, your remaining debt will be forgiven.
That might be your best shot at having some student debt canceled. President Biden campaigned on wiping out $10,000 in debt per borrower, and leading Democrats keep pressing him to go to $50,000 – but the president has been waiting for legal reviews of his ability to cancel debt on his own, without Congress.
3. Refinance private loans
If your student loans are from a private lender and not the federal government, the longer payments pause doesn’t apply to you. But you could attack your student debt over the next few months by refinancing your loans, because interest rates on refi student loans from private lenders have been at historically low levels.
Whether you qualify for refinancing will largely depend on your credit score and your current income. If you’re not sure about your score, it’s easy now to check your credit score for free online.
Even if you’ve lost your job due to the pandemic, you may be eligible for a refi if you can show investment income or earnings from a side gig, or find a co-signer to back your application. To get the best rate to refinance a student loan, you’ll need to shop around and compare quotes from multiple lenders.
Just remember that refinancing is not an option if you’ve got a federal student loan, and replacing a federal loan with a private one will make you ineligible for any further loan relief from the government.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.