It’s been a nice long break since some of you made your last student loan payment, but unfortunately, they are starting again. It may feel overwhelming, especially if your financial situation changed drastically since the pandemic began. But don’t worry! There is still plenty of support in place for you.
Here’s what to do to prepare before you start making student loan payments again.
What Does Student Loans Starting Again Mean for You?
For the average person, student loan repayment starts early next year. Exactly when your payment is due depends on your loan servicer and when your loan’s original due date was.
The US Department of Education has set out a plan that offers clear communication to borrowers so no one is left wondering what to do next. So, if you have student loans, you should have received a few email communications by now from your loan servicer. If you haven’t, make sure to check your spam folder as their communications may sometimes be filtered by your email provider.
What Happens if You’re Still Having Financial Trouble?
If you’re still unemployed or have other financial issues due to the pandemic, you must speak up. If you don’t let the Department of Education or your loan servicer know what’s going on, they can’t help.
Don’t feel embarrassed or as if you should have the situation fixed. It’s happening to millions of other people too.
If you can’t afford your monthly payment, your first step should be to apply for economic hardship deferment, but if you’re still unemployed, complete the unemployment deferment form. This is the easy way to let everyone involved know you’re having financial issues and may not be able to jump right back into your payments.
If you’re able to defer your student loans payments with these plans, interest won’t accrue. This is good news because it means your balance won’t get so high that you feel like you’ll never get out of it.
If you’re not able to qualify for either program, forbearance will likely be an option, but it doesn’t have the same benefits. Interest will accrue if you place your loans on forbearance, so it’s important to have a plan on how you’ll start making payments or if you can, even make partial payments during the time to keep the interest accrual down.
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How Should you Prepare for your Student Loan Repayments?
To prepare yourself for student loan payments starting again, figure out how much you can afford to pay. Does your old payment plan fit into your budget or are you in a different financial position? If not, start to figure out what you’ll do, and don’t wait until payments are due. If you can’t afford your payments, the worst thing you can do is to do nothing at all.
After you figure out how much you can afford to pay, make sure to log in to your servicer’s website and review your loan terms. It has been over 18 months since student loan payments were paused, so many of you may not remember how much you were paying. Therefore, make sure to log in early to ensure that everything is in order. The last thing you want is to miss a payment because you thought that the bank account linked was still active, but in reality, you switched banks over a year ago.
Can you Apply for Student Loan Forgiveness?
Student loan forgiveness programs still exist like they always did. You can apply for these programs as you become eligible, with the most common being the Public Service Loan Forgiveness Program.
Most student loan forgiveness programs require 10 years of payments, though, so you may still find yourself on the hook for payments for quite a while. This makes an income-based repayment plan even more important to put on your radar now – especially if you are struggling to make your payments.
Regarding whether President Biden’s wish to forgive $10,000 in debt for every student will come true is still out for debate. Some say it will happen and others say there’s no way. No one will know until we get the final word from the administration.
Other Student Loans Tips
- Make sure you know your loan – Don’t assume you know/remember the terms or what will happen when repayment starts. Pull up your account and investigate what comes next. You may have a new loan servicer since many pulled out of the system since the pandemic started. Know everything about your loan now so you can make smart decisions when repayments begin.
- Pay off as much interest as you can – Don’t give up on paying interest. If you have the money, make the payments. Even though payments aren’t required right now, the more interest you can knock off your loans, the more money you’ll save in the long run.
- Investigate your State’s programs – Many people don’t know this, but nearly every state here in the US has at least one loan forgiveness program. These programs are run by the States and not the federal government, so you may not hear about each program being talked about widely on the news. Here’s a good resource of all of the Student Loan Forgiveness programs in the US.
Student loan repayments starting again can be scary, but there is plenty of support available. The hope is that payments won’t start ‘regular’ right away so everyone can ease their way back into making the regular payments again.
If you’re able, keep making the payments on your student loans and paying down the interest, but don’t forget to apply for any programs that you may qualify for to get the most out of your loan.