Student loan borrowers who were affected by the Student Loan Pause this May 2022 are wondering what to do now. The Department of Education issued a memorandum on September 6th, which outlined some options for those affected. In this article, we will discuss those options and help you decide what is best for you!
What to do if you’re in the middle of paying back your student loans?
The current student loan payment pause is set to end in May 2022. If you’re currently in the process of repaying your student loans, you may be wondering what to do next.
Here are a few options to consider:
- Continue making regular payments. If you’re able to continue making regular payments on your student loans, doing so can help you pay off your debt faster. It can also help reduce the amount of interest you accrue over time.
- Pay more than the minimum payment: If you’re able to pay more than the minimum payment each month, this can also help you pay off your debt faster and reduce the amount of interest you accrue.
- Refinance your student loans. Refinancing your student loans can help you get a lower interest rate, which can save you money over time. It can also help you change the terms of your repayment plan to something that better suits your needs.
- Defer your student loans. If you’re unable to make regular payments on your student loans, you may be able to defer them. This means that you won’t have to make any payments for a set period. Keep in mind that interest will continue to accrue during this time, so deferring should only be used as a last resort.
How to prepare for the student loan pause?
The student loan pause is set to end on May 31, 2022. If you have federal student loans, you might be wondering what you should do next. Here are a few things to consider:
- Start by evaluating your finances and creating a budget. This will help you determine how much you can afford to pay each month on your loans.
- Consider your repayment options. There are several repayment plans available, and you may be able to lower your monthly payment by switching to a different plan.
- If you can’t afford the standard monthly payment, look into deferment or forbearance options. These options can allow you to temporarily stop making payments or make smaller payments for some time.
- Think about whether you want to consolidate your loans. This can simplify your repayment by combining multiple loans into one monthly payment.
- Prepare to make your first payment. You should receive a bill in the mail before your first payment is due. Make sure you have the money saved so you can make your payment on time.
What will happen during the student loan pause?
The federal government has announced that they will pause all student loan payments and interest accrual from May to September of 2022. This means that if you have any outstanding student loans, you will not be required to make any payments during this period. Additionally, any interest that accrues on your loan during this time will be forgiven.
Federal student loan payments will resume in October 2022. At that time, your loan servicer will contact you to let you know how much your new monthly payment will be. This new payment may be higher than your previous payment because it will include any interest that accrued during the pause.
If you have private student loans, you should contact your lender to see if they are offering any type of relief during this period. Private lenders may offer a forbearance or deferment option, which would allow you to temporarily stop making payments on your loan. However, keep in mind that interest will continue to accrue on your loan during a forbearance or deferment, so your balance may increase.
The Department will also continue to provide loan relief, including to borrowers who have been defrauded by their institutions and those eligible for relief through the Public Service Loan Forgiveness program.
How to take advantage of the student loan pause?
The student loan repayment will resume for millions of borrowers this May after the payment pause ends. Student loan programs like Income-Based Repayment (IBR) and Pay As You Earn (PAYE) will also resume.
If you’re currently enrolled in an IBR or PAYE program, your monthly payments will increase. If you can’t afford the new monthly payment, you have a few options.
You can switch to a standard repayment plan, which has a fixed monthly payment for up to ten years. Or, you can consolidate your loans into a new Direct Consolidation Loan. This will give you a new repayment term and interest rate.
If you’re not currently enrolled in an IBR or PAYE program, now is the time to consider enrolling. IBR and PAYE can help you lower your monthly payments based on your income and family size.
If you’re struggling to make your student loan payments, there are options available to help you stay on track. Contact your loan servicer to discuss your options. They can help you find a repayment plan that works for you.
Take advantage of the student loan pause ending this May by exploring all of your repayment options. By doing so, you can ensure that you’re making the best decision for your financial future.
Can Biden forgive more student loan debt?
While on the campaign trail, Biden said he’d support legislation canceling a minimum of $10,000 of federal loans per borrower. However, the White House has been largely silent on the issue since he took office, though the Department of Education made moves on this front in the last couple of months.
Following the department’s revamp of its Public Service Loan Forgiveness program in October, 70,000 borrowers will have $350 million in debt forgiven, and more than 400,000 could qualify for loan discharge through the program in the coming years.
In conclusion
If you’re struggling to make your student loan payments, there are options available that could provide some relief. The administration is extending the pause on federal student loan repayments to continue going back on your feet during these tough years. Keep in mind, though, that any changes made to your repayment plan could extend the length of your loan and increase the total amount you owe. So, it’s important to consider all your options and make the best decision for your unique situation.
