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Why You Should Consider Making Payments During the Student Loan Pause

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What’s happening

Federal student loan payments were slated to resume after Aug. 31, but President Biden extended the current moratorium through Dec. 31, 2022.

Why it matters

If you still make payments during the pause, you’ll make a dent in your debt instead of just paying toward the interest.

US President Joe Biden has extended the current student loan payment freeze, in effect since March 2020, “one final time” through Dec. 31, 2022. That gives the 45 million Americans with federal student loans some additional breathing room. But you might want to think about resuming or continuing payments regardless. 

Biden has only provided $10,000 in debt forgiveness — or $20,000 for Pell grant recipients — and only for borrowers making less than $125,000. The average student loan debt is about $37,000, according to Federal Student Aid Data, and some 2.1 million Americans owe more than $100,000.

Only about 1.2% of borrowers continued paying off their loans during the pause, according to information from the Department of Education. But if you can afford it, it’s a greatway to pay down your principal while no interest is accruing. 

Why should I pay my student loans during the freeze?

Although student loan payments have been paused for more than two years, you still owe the remaining balance. And interest will start accruing again when the moratorium is lifted.  

Anything you can direct toward your student loans during the pause will reduce your debt, saving you money in the long term.

Consider this student loan payment freeze like a long intro 0% APR period on a credit card. Free financing means that all of your payments will go directly toward paying down the principal, reducing the interest you’ll pay once the moratorium is lifted.

According to a July study commissioned by the digital banking platform Laurel Road and market research company HarrisX, a quarter (26%) of federal borrowers planned to restart payments in September regardless of any extension.  

How can I decide if I should keep making loan payments?

Whether continuing to make loan payments is the right decision for you depends on your personal financial situation. Going into another form of debt to pay off your student loans doesn’t make sense.

The big question you need to answer is “How much can I afford to put toward my student loans each month?”

The Federal Student Aid Loan Simulator can help you determine exactly how much you should pay each month based on your goals, salary, loan amount and other factors.  

What if I’m on an income-driven repayment plan or working toward loan forgiveness?

Income-driven repayment plans allow you to make payments based on your salary. After the term of your plan — usually 20 to 25 years — your loan balance is forgiven. If you were on an IDR plan before the freeze, you’ll receive credit toward IDR forgiveness for each month of the payment pause. Since you’re already receiving that credit, there’s not much incentive to pay during the moratorium if loan forgiveness is your ultimate goal.

If you’re working toward loan forgiveness through the Public Service Loan Forgiveness or Teacher Loan Forgiveness programs, all months of the student loan moratorium will also count toward your payments required for federal loan relief. Again, there’s little benefit to making payments during this time if this is your situation.

The PSLF program was recently expanded. It cancels any remaining debt on direct student loans for qualifying public servants like teachers, firefighters, nurses, military members and government workers who make on-time payments for 10 years. If you previously applied for loan forgiveness through the PSLF and were denied, you may now qualify through the expanded requirements that rolled out in October 2021

Activists outside of the White House call on Biden to cancel student debt.  


Anna Moneymaker/Getty Images

How do I start making payments again if I stopped in March 2020?

Start by contacting your loan servicer and checking to make sure that all of your personal information is correct and updated. If you’re not sure who your loan servicer is, log in to the Federal Student Aid website and visit your dashboard.

Once you’ve identified your servicer, the Federal Student Aid site provides links to servicer sites for making payments.

It’s worth noting that loan servicer Navient transferred all of its 5.6 million student loans to the provider Aidvantage in late 2021. If Navient was your loan servicer, you should be able to log in at Aidvantage with your Navient credentials.

If you were enrolled in an income-driven repayment plan designed to establish affordable monthly payments, your enrollment should still be in place. All the months since March 2020 will count as paid toward the years you need for the loan to be forgiven.

Also, if you registered for automatic payments on your federal student loan before March 2020 and want to start them up, you’ll need to opt in again.

Will the freeze on student loan payments be extended again?

The CARES act in March 2020 established the original forbearance that month. President Donald Trump and the Department of Education extended the deadline twice and Biden has postponed it five times since taking office.

In a tweet Wednesday morning, Biden said he would extend the pause “one final time” to Dec. 31. So another extension is unlikely and the administration has said borrowers should prepare to start making payments in January 2023.

For more on student loans, discover five ways to take control of your student debt and get the scoop on the Public Service Loan Forgiveness program and the cancellation of student debt at one for-profit college.


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