The Department of Education announced that the student loan payment pause for federal student loan will continue through Aug. 31, 2022. After over two years of payment relief, student loan payments will return.
Due to the CARES Act, borrowers received the forbearance automatically, and the interest rate on their balances was set to 0%. The student loan payment pause allowed time for borrowers to deal with possible job changes/losses, or to accumulate emergency savings. Here are five ways you can successfully prepare for the return of student loan payments.
- Update your information. Did you move, change your phone number or email address within the past two years? Check the contact information that your loan servicer has on file and update if necessary. If your loan servicer does not have the correct information you could miss out important notifications such as when payments are due and the amount.
- Find out the specific date when payments will begin. While the forbearance on student loan payments ends on Jan. 31, 2022 the date which your first payment will be due is up to your loan servicer(s). You will receive a billing statement form which will include your:
- payment due date, and
- payment amount.
Your payment will be due no sooner than 21 days after your servicer sends the billing statement. To find out your upcoming payment amount, log in to your loan servicer’s website. If your servicer doesn’t provide this info online, you can call or email your servicer.
If you can’t log in, call 1-800-4-FED-AID (1-800-433-3243) for loan servicer info.
- Practice for the real deal. If you can, start making practice payments now by saving your regular student loan payment amount each month. This will get you back into the groove of making that payment. But, more importantly, it will let you know if you are financially capable of making those same payments every month.
- Consider the best repayment plan for you. The one you were on prior to COVID-19 might not be what works for your current situation. Changes in income, employment status, and goals may have occurred since then. Contact your loan servicer to explore your repayment options. Various repayment plans are offered by The U.S. Department of Education. An income-driven repayment (IDR) plan is based on how much money you make. Under an IDR plan, your payments could be as low as $0 per month.
5. If necessary, request short-term relief.
Can’t find a repayment plan that works for you? You can request a deferment or forbearance to temporarily pause or lower your payments. You can first use a tool such as the Loan Simulator on studentaid.gov to learn how this short-term relief will affect your loans and loan payments. Then contact your loan servicer to request a deferment or forbearance.
Reminder: Interest can still accrue during deferment or forbearance. Loan forgiveness options such as Public Service Loan Forgiveness or IDR plan forgiveness are also affected by deferment and forbearance. What are some ways that you are preparing for the end of the student loan payment pause?
Need more information about student loans? Download our free Ultimate Student Loan Guide.
By Candice Davie
Featured image by LinkedIn Sales Solutions on Unsplash
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