Student Loan Payments Resuming Soon – Explore Your Options
Due to a provision in the debt ceiling deal passed on June 2, additional student loan payment extensions are no longer possible. That means that interest will begin accruing on federal student loan balances beginning September 1, 2023. Payments will also resume in October, regardless of when the Supreme Court finally rules on Biden’s loan forgiveness plan. Speaking of which, it seems highly unlikely that blanket student loan forgiveness will happen for the millions of borrowers who are eagerly awaiting a decision. If you have federal student loans, now is the time to explore your repayment options and put together a plan of action.
Plan For Repayment Now!
With just a few short months left before student loan payments resume, it’s important to get organized and put together a plan for repaying your debt. This is especially true if you haven’t been making any payments over the last three years or your loan servicer has changed.
First, identify your student loan servicer and update your information. You can do this by logging into StudentAid.gov. Once you’ve identified your servicer(s), be sure to log into your account(s) and update your personal information. Make sure your address, phone, and email address are all correct. Update your banking information too, if you plan to resume automatic payments.
Next, confirm your monthly payment amount. If you are unable to determine this from your online account, call your servicer. Although those on income-driven repayment plans are likely to have the same monthly payment as before, those on a standard repayment plan may see a different amount. You’ll want to speak with your servicer as soon as possible to confirm any changes, as it’s likely that communication delays will increase as the payment deadline approaches.
Finally, explore your repayment options. Don’t wait for the repayment pause to end before making any necessary changes. If you think you may be unable to afford the monthly amount, look into other student loan repayment options now. This may help you avoid delinquent payments, or worse, going into default.
Explore Your Repayment Options
Although the pandemic is technically over, many borrowers are still struggling financially. If you’re worried that you’ll be unable to make your student loan payments once they resume, you do have several options.
Change Your Payment Plan
One way to make your payments more manageable is to see if you qualify for other types of repayment plans. An income-driven repayment plan may significantly reduce your monthly payment. In some cases, your payment may even be as low as $0 per month. Just keep in mind that you’ll be making payments longer (20+ years) than you would with a standard repayment plan (10 years), but any debt not paid off at the end of the term will be forgiven.
The U.S. Department of Education is also working to revamp the Revised Pay as You Earn Repayment (REPAYE) plan. Under its new rules, you would only be required to make payments equal to 5% of your discretionary monthly income. Additionally, those with $12,000 or less in student loan debt may be able to get their loans forgiven after 10 years.
Postpone Your Payments
If you’re not able to make any payments once the pause ends, another option is to delay your payments through forbearance or deferment. You may qualify for a temporary suspension of your payments if you are experiencing financial hardship, such as unemployment or a serious illness. Although both allow you to postpone your payments for several months, interest will not accrue under deferment if your loans are subsidized.
See If You Qualify For Forgiveness
Getting approval for student loan forgiveness may seem like a long shot but it’s worth looking into if you think you may qualify. Under the Biden administration, changes to the programs have made it easier to certify eligibility and get approval. Since October 2021, more than 615,000 borrowers have been approved under the Public Service Loan Forgiveness (PSLF) Program.
To see if you qualify for forgiveness or any of the repayment options discussed, contact your student loan servicer before the repayment pause ends. You can also call MoneySolver at 855-476-6920 for a free consultation and explore all your student loan relief options.