Todd Erkis is a visiting professor of finance at St. Joe’s who writes weekly columns answering students’ financial questions.

I am graduating in May and I am confused about all of the things going on with student loans. Should I start making payments after I graduate? I heard that some student loans are no longer accruing with interest. I would appreciate it if you could explain what is going on and what I should do after graduation with my student loans. George P. ’21, economics major.

On March 27, 2020, the CARES Act was passed by Congress and signed into law by former U.S. President Donald Trump. The CARES Act suspended federal student loan payments, stopped collections on defaulted student loans and set the interest rate on all student loans to 0%. All of these measures have been extended to go through at least Sept. 30, 2021. Please note that this is for federal student loans only. Private student loans are not covered by the CARES Act, according to the Federal Student Aid office of the Department of Education. 

George, the impact to you depends on your mix of federal and private student loans. The amount you owe on your federal student loans will stay the same until at least Sept. 30, 2021 because no interest is being accrued. Most private student loans will continue to increase with interest. Check with your private student loan provider/servicer (if you have one) to see if you can take advantage of any programs they offer to reduce your interest rate on the loan on a temporary or permanent basis.

Since I don’t know your specific situation, I am going to assume for the purpose of this article that you have both a federal and smaller private student loan. I am also going to assume that you will be working immediately after graduation. Here are some things to think about:

I always advise creating a cash fund for a rainy day. This fund should be about six months of expenses. Since you do not need to make payments on your federal student loan until September, pay yourself instead and build up that cash reserve for emergencies. Most people do not have enough saved to pay for an unexpected expense. Don’t let that be you.

Unless your private loan provider/servicer will not charge you interest like the federal loan, make all the required payments on your private student loan. If they allow you to delay payments, do so only if they will not charge you interest. If they are charging interest, you should make the required payments.

If you have money available after building up your cash reserve and making your required private student loan payment, either save that additional money (since you will have to start making the federal student loan payments at some point) or use that extra money to further pay down your private student loan.

Retiring one’s student loan debt should be a priority so you are able to have more money for vacations or start saving for a house in the future. Financially, it will be better not to make payments on your federal student loans until interest starts to be charged again and the government decides if they will forgive some or all of your federal loan (which is currently being discussed in Washington D.C.).  

Good luck after graduation!