Student loan repayments start again in February, but survey finds 89% of borrowers are not ready

About 9 in 10 full-time borrowers said they were not financially secure enough to resume federal student loan payments in February 2022, according to a new survey. (iStock)

Federal student loan payments have been suspended until Jan.31, 2022, as part of the CARES Act to protect borrowers from delinquency during the COVID-19 pandemic. But at the end of this forbearance period, many borrowers do not feel ready to resume their payments.

According to a survey by the Student Debt Crisis Center. More than a fifth (21%) of respondents said they would never be ready to resume payments.

Additionally, 88% of student loan borrowers said coronavirus relief for federal loans was critical to their financial well-being during the pandemic.

But the federal student loan payment hiatus ends in just 70 days, meaning borrowers will need to prepare their finances to avoid missing payments. Failure to pay your student debt can result in late fees, negative credit impacts, and even payday garnishment.

Read on to learn more about ending administrative tolerance period and compare student loan repayment options, such as refinancing. Visit Credible to view student loan refinancing offers with no impact on your credit score.

WHAT TO DO IF YOUR STUDENT LOAN DEPARTMENT CLOSES

Will student loan forbearance be extended?

The Department of Education is unlikely to extend the student loan payment break. The ministry announced in August that the “final extension” of federal loan forbearance would expire in January 2022. This gave borrowers a six-month grace period to prepare financially for resumption of payments.

Education Secretary Miguel Cardona reiterated in October that federal borrowers should expect to resume payments when the current forbearance extension expires. In the past month, the Federal Student Aid Office (FSA) has informed borrowers that collection activities will resume in February.

One option for borrowers who cannot afford their monthly payments is to refinance their student loan. Keep in mind that refinancing your federal loans to a private loan would make you ineligible for certain benefits such as federal student loan exemption programs. Browse the interest rates in the table below to see if student loan refinancing is right for you.

BIDEN ADMINISTRATION CANCELS $ 5.8B IN STUDENT LOAN DEBT FOR DISABLED BORROWERS

How to prepare for the resumption of student loan repayments

With just a few months of the federal loan repayment restarting, it’s time to take a look at your loan repayment plan. Here are some steps you can take now to prepare for the end of the forbearance period:

  1. Register for the income-based refund. An IDR plan limits your monthly federal loan payment to 10-20% of your discretionary income. You can register on the FSA website.
  2. Request additional federal forbearance. Federal borrowers can benefit from up to 36 additional months of forbearance through postponement of unemployment Where postponement of economic difficulties.
  3. Reduce your monthly payments with refinancing. Well qualified student loan borrowers who refinanced in the Credible Market have reduced their payments by over $ 250 on average.

SCHUMER REITERATES CALL FOR PRESIDENT BIDEN TO CANCEL $ 50,000 IN STUDENT LOAN DEBT

According to data from Credible, student loan refinance rates are nearing all-time lows, making this a good time to lock in a lower rate on your student loan debt. By lowering your interest rate, you may be able to save money on your monthly payment or pay off your debt faster.

47K VETERANS AND ACTIVE SERVICE TROOPS WILL AUTOMATICALLY RECEIVE A STUDENT LOAN CLAIM

If you’re still not sure if refinancing is right for you, use a student loan refinance calculator to estimate your new monthly payment and overall interest savings. You can contact a knowledgeable loan officer at Credible to find out more.

PUBLIC SERVICE LOAN FORGIVENESS PROGRAM CALLED “BROKEN” AND “CONFUSED”

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.


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