The student loan payment relief has been extended through August 31, with payments set to resume “at some point,” according to the Biden administration. But that extension might continue beyond August, as new student loan relief initiatives may not be ready in time.
What does that mean for you? Depending on your degree, your loan type, and other factors, there are some ways you can prepare in the meantime if you’ve halted student loan payments.
Broad student loan forgiveness
In April, the Biden administration announced changes to income-driven repayment (IDR) plans, which would expand student loan forgiveness eligibility:
- The U.S. Department of Education will allow one-time adjustments to count previous periods of repayment (even for non-IDR plans) to count toward a 20- or 25-year IDR loan forgiveness term.
- The U.S. Department of Education will also make a one-time adjustment to count payments for 12 consecutive months or 36 months cumulatively toward a 20- or 25-year IDR loan forgiveness term.
- Additionally, any past periods of deferment (with the exception of in-school deferments) before 2013 will count toward a 20- or 25-year IDR loan forgiveness term.
The Biden administration also announced the Limited PSLF (Public Serivce Loan Forgiveness) waiver, which expands qualifying repayment plans for PSLF. You can read more about that program, and who qualifies, here.
What should you do in the meantime?
It’s important that you know about the recent student loan forgiveness plans because it has expanded to include many more people than it did previously. But what if that forgiveness doesn’t apply to you? Should you continue to pay off your loans anyway?
You have a couple options here. First, there’s no harm in continuing to make payments on your student loans right now. No interest is accruing, so you can get a jump on those payments now. However, you can also put the money aside that you would be using to pay your loans, and save it for when payments resume. That will help you get back into the loan payment mode ahead of time, while still waiting to see what changes might come with student loan forgiveness.
Stay up to date and get prepared
This is also the ideal time to make sure you still know where to pay your loans, and update any information that might have changed. Millions of federal student loan borrowers have had their loan servicer changed during the relief period. Find out what your login is, and make sure you know how to receive important updates and communications from the servicer.
You can also check your student loan information at StudentAid.Gov to review your information and prepare for student loan payments to return.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.