3 tips to help ease the burden of student loans when abstinence ends

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The termination of the federal student loan due to COVID-19 ends on September 30, 2021. Here’s what you can do to prepare your finances for repayment resumption. (iStock)

Federal student loan payments were suspended at the start of the coronavirus pandemic in March 2020 to provide much-needed assistance to student loan borrowers. But the COVID-19 abstinence period ends on September 30, 2021 – a deadline that is fast approaching.

Read on to find out more about the options for when it’s time to start paying again:

  1. Take a close look at your monthly budget
  2. Apply for a federal student loan debt cancellation
  3. Refinance Your Private Student Loans

And if you decide refinance your private loans, you can use an online marketplace like Credible to compare offers from several lenders

WHO BENEFITS FOR FORGIVING STUDENT LOAN?

1. Take a close look at your monthly budget.

While some federal student loan borrowers They may have diligently saved money that they would otherwise have spent on their payments, but this is not the case for everyone. If you spent extra money during the abstinence period, you may want to include your student loan payment in your budget for the next few months. Even if you’re not making a payment, it can help you adjust to the gap in your cash flow and see where you can improve your budget.

Also check if you are still participating in automatic payments. Thus, you will not be surprised when the loan payment is debited from your bank account.

2. Apply for a federal student loan debt cancellation.

The federal government offers a number of programs for the poor to help student loan borrowers deal with college debt, including:

  • Delay due to economic difficulties or deferral for unemployment: Deferring student loan payments will suspend monthly payments. As with the COVID-19 waiver, there is no interest charge, so your base balance remains the same during this period.
  • General patience: If you are not eligible to participate in the above payment deferred programs, you can apply for a general deferred payment to suspend payments while interest is accrued. This can be a useful strategy if you cannot afford to pay off your student loan, but it may end up costing you more money in interest in the end.
  • Income-driven repayment plan: Participating in an income-based repayment plan means that your monthly payments will be limited to a percentage of your discretionary income.

DELAY OR PROVIDING A STUDENT LOAN: WHAT IS THE DIFFERENCE?

3. Refinance private student loans.

There are some risk factors to consider when it comes to refinancing federal loans, such as abandoning federal protection such as the programs described above, and wasting the remaining time in the current federal abstinence period. You also risk losing the right to any student loan forgiveness measures if implemented in the future.

Refinancing of private loans this is a smart move right now because interest rates have historically been low. You may be able to save money on monthly payments that you can use to pay off federal student loans.

You can get an idea of ​​the current student loan rates in the table below. If you think you can get a lower rate on your private student loans, you can prequalify without affecting your credit score on the online credit marketplace Credible.

LOOKING FOR A PUBLIC SERVICE LOAN FORGIVENESS? YOU CAN RUN TO THIS PANDEMIC ROAD AREA

Find out if student loan refinancing is right for you

When considering refinancing private student loans, consider if:

  • You can get a lower interest rate on your new loans
  • You can lower your monthly payment or pay off your loan faster

Student loan borrowers who refinanced a shorter-term loan through Credible saved an average of $ 17,344 over the life of the loan. You can use the student loan refinancing calculator, like this one from Credibleto determine how much you can save by refinancing your private student loans.

And if you’re still not sure if a student loan refi is right for you, then contact a loan officer on Credible to learn more about your options.

5 ACTIONS TO DO WHEN IT CONTINUES TO A STUDENT

Have a financial question but don’t know who to contact? Write to the Safe Money Specialist at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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