For more than a year, people with federal student loans haven’t had to make payments, and their loans have accrued no interest. It’s one of the many financial assistance programs the federal government rolled out starting in March 2020. The CARES Act passed that month provided the initial assistance, and many subsequent iterations of economic stimulus have extended the freeze on federal student loan payments.
It’s helped millions of people since the spring of 2020, but that help is set to expire as of September 21. Borrowers will have to start making payments again in October unless another extension is granted.
Resolvly and other prominent organizations want federal student loan borrowers to prepare as if an extension isn’t coming.
The Talk of Extensions
There has been much talk about extending the freeze on student loan payments. Some prominent politicians and economists have suggested extending the freeze into 2022, and many organizations have supported that stance.
Even President Joe Biden has publicly stated he’s considering it. That being said, the unemployment rate is improving, especially for those who have at least a bachelor’s degree. This could ultimately result in Congress and the president allowing the freeze to simply expire come October.
How to Prepare
Resolvly suggests that anyone who has benefitted from the federal student loan freeze should act as if there will be no extension. It’s better to plan for the worst and hope for the best. That way, you can only be pleasantly surprised and not devastated.
This may be easier said than done for some, as the Federal Reserve has reported that the median payment for student loan borrowers is $222 per month. Many people have monthly payments that are much higher than that.
So, how can you prepare for the student loan freeze to end?
First, start working your payment back onto your monthly budget. If you can set aside the monthly payment now, that will help put some extra cash aside for a few months before you have to make an actual payment.
Once you see what the payment does to your budget, make whatever adjustments are necessary to achieve equilibrium. This may mean ordering takeout food less or cutting back in other areas.
Second, update your contact information with your borrower if anything has changed since the freeze began. This may be a common occurrence for borrowers who have changed their residences since the pandemic began.
Finally, confirm that your automated payment information is up to date. You don’t want your first payment back to bounce because of incorrect account information.
While your lenders will remind you of the payments re-starting, you should take the initiative to make sure everything is in order starting now. The earlier you start, the better prepared you will be when your payments do eventually resume.
If you’re crippled with private student loan debt and you’re already having trouble making those payments since the federal student loan freeze didn’t apply, it’s possible that we can help.
Resolvly works to connect consumers with debt relief programs that are available for unsecured debt, such as private student loans. Call us today for a free consultation to see what programs you may qualify for.
Resolvly LLC is a Florida Bar-approved lawyer referral service that helps clients nationwide connect with consumer protection attorneys that specialize in debt resolution. Founded in 2015, the Boca Raton-based company has become an industry leader by helping thousands of Americans find the right, legal-based solution to reduce or eliminate their unsecured debt. Resolvly helps with credit card debt, private loans, private student loans, business debt, medical bills, and vehicle repossessions.