Federal student loan payments have been suspended until January 31, 2022, as part of the CARES Act to protect borrowers from delinquency during the COVID-19 pandemic. But as this forbearance period draws to a close, many borrowers feel unprepared resume payments.
According to a survey of the Student Debt Crisis Center. More than a fifth (21%) of respondents said they would never be ready to resume payments.
Additionally, 88% of student borrowers said coronavirus relief for federal loans was critical to their financial well-being during the pandemic.
But the federal student loan payment break ends in just 70 days, meaning borrowers will need to prepare their finances for avoid missed payments. Failure to pay your student debt can lead to late fees, negative credit impacts, and even wage garnishment.
Keep reading to learn more about the end of administrative forbearance period and compare student loan repayment options such as refinancing. Visit Credible for view student loan refinance offers without affecting your credit score.
Will student loan forbearance be extended?
The Ministry of Education is unlikely to extend the student loan payment break. The Department announced in august that the “final extension” of federal loan forbearance would expire in January 2022. This gave borrowers a six-month grace period to prepare financially for the resumption of payments.
Education Secretary Miguel Cardona repeated in October that federal borrowers should expect to resume payments when the current forbearance extension expires. Over the past month, the Federal Student Aid (FSA) office was inform borrowers collection activities will resume in February.
An option for borrowers who cannot afford to pay their monthly payments is student loan refinance. Keep in mind that refinance your federal loans in a private loan would make you ineligible for certain benefits like federal student loan forgiveness programs. Browse Interest Rates in the table below to see if student loan refinancing is right for you.
How to prepare for the resumption of student loan repayments
With only months until federal loan repayments restart, now is the time to review your loan repayment plan. Here are some things you can do right now to prepare for the end of abstention period:
- Sign up for income-oriented reimbursement. An IDR plan limits your monthly federal loan payment to 10-20% of your discretionary income. You can register on ASF website.
- Request additional federal forbearance. Federal borrowers may qualify for up to 36 months of additional forbearance through report of unemployment Where postponement of economic difficulties.
- Reduce your monthly payments with refinancing. Well-qualified student borrowers who refinanced on Credible’s marketplace reduced their payments by over $250 on average.
Student loan refinance rates near all-time lows, says Credible data, making this a good time to lock in a lower rate on your student loan debt. By lowering your interest rate, you may be able to save money on your monthly payment or pay off your debt faster.
If you’re still not sure if refinancing is the right decision for you, use a student loan refinance calculator to estimate your new monthly payment and overall interest savings. You can get in touch with a knowledgeable loan officer at Credible to learn more.
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