President-elect Joe Biden will extend the federal government’s pause on student loan payments and interest accrual through Sept. 30.

The federal government’s pause on student loan payments and interest accrual was set to end on Jan. 31, meaning borrowers would have to start making payments again in February without action.

The relief has been in place since March 2020 when President Donald Trump ordered interest rates set to zero on federal student loans and allowed roughly 40 million borrowers to defer payments without penalty to deal with the fallout caused by the pandemic-fueled recession. Congress later extended the pause as part of the first stimulus law, known as the CARES Act, and the Trump administration has since extended it to the current Jan. 31 end date.

Congress was widely expected to extend the pause again, but failed to include it as part of the $900 billion stimulus law approved in late December.

Here’s what you should do

Biden supports a plan to forgive $10,000 in student loans outright, but is calling on Congress to pass legislation instead of doing it through executive action.

With the pause extended until September, there’s still plenty to think about.

You might fall into one of these scenarios:

  1. If you’ve been making payments to take advantage of the zero percent interest rate while paying down principal, you’ve benefited from the pause (more on that below). Keep it up!

2. If you stopped making student loan payments and have been saving or spending that money on other things these past 10 months, you’ll have to add student loans back into your budget once relief ends. Check what your monthly payment is, and set a payment reminder (or automatic bill-pay) to help you remember.

3. If you’ve suffered financial hardship because of the coronavirus pandemic, there are ways to lower or suspend your student loan payments. Read more about that here.

How big a benefit is the pause?

The 10-month pause on interest accrual has especially benefited two categories of borrowers: those who lost their jobs and would have defaulted on their payments if forced to keep making them, and high-earners who owe the most and were able to pay down principal during the freeze.

Student loans are the largest non-mortgage source of U.S. debt, but the amount of debt varies widely. Just 6 percent of borrowers have more than $100,000 in student loan debt, but this group makes up one-third of all the outstanding debt, according to researchers at the Brookings Institution. Meanwhile, 18 percent of borrowers have less than $5,000 in debt.

Here are two examples:

Marcus graduated from a four-year university and now has $30,000 in student loan debt (the national average) with an interest rate of 4.66 percent (also the national average). In one year, he’d have $1,398 in interest build up ($30,000 x .0466).

Meanwhile, Alex went to grad school and has $66,000 in debt (the national average for graduate students) and has a 6.22 percent interest rate (also the average), meaning $4,105 of interest would accrue in one year for Alex ($66,000 x .0622).

Those who keep paying see the most benefit

Let’s say Marcus was able to keep making $400 monthly payments for 10 months, managing to knock down $4,000 in principal, while Alex made $600 monthly payments to knock off $6,000.

That means when the pause ends, Marcus would have $26,000 in debt on which interest would accrue — not $30,000. That would save him about $200 over the course of the next year, and would allow him to pay off his loans more quickly.

Meanwhile, Alex would be left with $60,000 in debt — not $66,000. That would save her just shy of $400 over the course of the next year.

Of course, these examples assume Marcus and Alex were able to keep making payments. For so many people, the pandemic-fueled recession has cost them their jobs, which is why federal officials created the student loan pause in the first place.