Back in March 2020, Uncle Sam did you a favor and paused most student loan payments...without you even having to ask. In early December, he did it again and extended the “administrative forbearance” expiration date through January 31, 2021. And now, President Joe Biden wants to keep things going through September 30.
You can still make payments on your federal student loans in the meantime, but there’s no penalty if you don’t. And interest won’t accrue. Here’s how to game-out your next move.
Make sure your type of federal student loans qualify for administrative forbearance.
Decide whether you’ll pay your bill during the administrative forbearance period. If you do, your money will go toward the loan principal. Paying that down means you’ll have less to pay interest on later – so you could be out of debt sooner.
If you’re struggling to keep up with regular bills, your emergency fund could use some TLC or you have higher-interest debt, you can use this extension to get ahead.
Sorry, this doesn’t apply to you. The Department of Education can’t legally tell private institutions to stop collecting your payments.
If you need help, call your lender or servicer to see if they offer assistance programs. You may also be able to get a lower payment by refinancing.
Help yourself to savings. Some ideas: negotiate for a better rate on your cable and phone bills, grocery-shop smarter, make small adjustments to lower your utility bills, and shave some money off your insurance premiums.
Federal student loan payments aren’t usually this flexible. But a lot of Americans are struggling financially right now. So the Department of Ed and new admin are trying to help ease the burden for the 42 million Americans with student loans. Take the help if you need it. And if you’re struggling with private student loans, call your lender or servicer to see if they’re willing to help. If not, look for ways to adjust your budget and make repayment more manageable.
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Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus