Federal student loans are paused for 6 months — should you pay anyway?

Federal student loan borrowers will see payments automatically suspended — without incurring interest on them — for six months, according to a measure included in federal stimulus package released last month. This policy applies only to federal loans, not to private student loans.

This option, called a forbearance, will run through Sept. 30. You will be notified of the option to continue making payments toward the principal. Contact your servicer if you have further questions.

Make no mistake: This is a pause on payments, not forgiveness. Your debt will be waiting for you when repayment begins at the end of the six-month forbearance, unless the policy changes.

And the policy could well change. The measures were made as part of the federal stimulus bill in response to the economic fallout related to the spread of coronavirus, and COVID-19, the illness it causes. Neither the outbreak nor its economic impact shows signs of slowing, and some lawmakers have proposed more dramatic measures.

“I do think there’s going to be additional waves of relief, depending on how this pandemic plays out,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.

Until then, here’s how to decide what to do next.

If you want to pause payments

You don’t have to do anything to get a forbearance to stop student loan payments for six months, which begin in April. You can call your servicer to request a forbearance before then, which would be retroactive to March 13. Interest won’t continue to accrue, as it normally would.

A forbearance could give you breathing room to address other financial concerns.

If you are jobless or working reduced hours, a forbearance may free up cash to pay the rent and utilities or grocery bills. Even if your pay is unaffected, a forbearance could help you divert some money toward building an emergency fund or help you pay another, more pressing debt.

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Usually forbearance is granted at the discretion of the servicer and interest will continue to build. In this case, the Education Department has instructed all servicers to automatically place all loans into a six-month forbearance, and due to the waiver, no interest will grow.

If you’re behind on your student loan payments (or get behind)

Payments are automatically suspended for all borrowers, including those who are more than 31 days delinquent prior to March 13 and those who become more than 31 days delinquent in the coming days. That means the loans are placed in forbearance and won’t default.

Default on federal loans happens when a payment is 270 days past due, sending your loan to collections and exposing you to damaged credit, garnished wages and seized tax refunds.

For borrowers in loan rehabilitation, each month of the forbearance period would also count toward rehabilitation.

For those with federal student loans in default, all collection activities are suspended. You can get a refund for any forced student loan payments made since March 13. If your tax refund was seized before March 13, it will not be returned.

If your loans are already in forbearance, any interest that already accrued will still be added to your loan principal when your repayment begins, but during the six-month waiver no new interest will be calculated.

If you are seeking Public Service Loan Forgiveness

A forbearance won’t undo your progress toward Public Service Loan Forgiveness, or PSLF. During the automatic forbearance, as long as you are still working with a qualifying employer, those six months will count toward PSLF.

Making payments during the forbearance won’t get you ahead on payments. You’re in the same boat whether you pay or not.

Under normal circumstances only full payments count. You also won’t lose credit for the payments you already made.

If you want to continue making payments

Borrowers might want to continue making payments on federal loans if they want to pay down their debt faster.

The stimulus bill states that borrowers will be given the option to continue making payments toward the principal, but otherwise all loans will be placed in forbearance.

If you do continue making payments, you won’t pay any new interest on your loans for six months, retroactive to President Donald Trump’s original March 13 announcement temporarily suspending student loan interest. This 0% interest rate will save you money overall, even though your payment won’t be lower.

The full amount of your payment will be applied to the principal balance of your loan once all interest accrued prior to the president’s announcement is paid.

Contact your loan servicer with any questions about continuing or restarting payments during the forbearance period.

If your income has changed

If you experience a change in income and still want to keep your payments going, the best way to lower your payment to something more affordable is to apply for income-driven repayment. You’ll get a new payment that is based on your family size and a percentage of discretionary income, and it will be in effect even after the stimulus relief has expired. You can apply online at studentaid.gov.

How to work with your servicer

If you want to restart payments during the automatic forbearance, contact your student loan servicer — it’s the private company that manages payment of your federal loans. But you don’t have to do anything to get the forbearance or the 0% interest rate.

Mayotte encourages borrowers to be patient with their servicers.

“These are unprecedented times, and I can assure you the servicers did not have a lot of notice,” says Mayotte.

To find out which loan servicer is yours, log in to studentaid.gov with your FSA ID.

You can get in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID.

Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. The article originally appeared on NerdWallet.