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What Extended Student Loan Payment Relief Means for You

You guys, we all know 2020 was crazy. But here’s the good news: you may not need to pay off your student loan until October, because the student loan relief which came from the CARES law was extended until September 30.

Let’s talk about what it really means so you know what’s going on and can get that student loan debt out of your life for good.

What did the CARES law do?

The CARES Law (or Coronavirus Aid, Relief, and Economic Security Act) was a stimulus bill passed by Congress early in the COVID-19 pandemic to help the economy (and many Americans) get back on their feet.

The CARES Act offered a temporary suspension of payments, a 0% interest rate on student loans, and a suspension of all collections and payday garnishments – or money taken from the company’s paycheck. borrower to repay the loan – on delinquent loans.

After that expired, then President Donald Trump extended the student loan relief until January 31, 2021. But now that President Joe Biden is in office, he has extended it again. . So what does this mean for you and your loans?

What will the extended student loan payment relief be used for?

First, let’s clarify something: this is not the same as a student loan cancellation plan. You will still have to pay the full amount of your student loans unless another policy or assistance program is put in place.

The basic idea behind this extension is that student loan interest rates will remain at 0% and payments on all federally held student loans will be suspended until the end of September 5.

These types of loans are included:

• Direct subsidized loans

• Direct unsubsidized loans

• Direct PLUS loans

• Direct consolidation loans

• Federal Perkins loans (if they are not from the university you attended)

• Federal Family Education Program (FFEL) loans (if not held by a commercial enterprise)

And get this: If you have this type of federal student loan, you’re already included – you don’t have to register or fill out any paperwork. Attractive! But it’s a good idea to check the Federal Student Aid website to verify that your loans qualify.

How the extension affects different loans

If your loan situation is different from the typical federal student loan repayment process, let’s explain how this extension could affect you. Here are some potential scenarios:

• Default: If your loans were in default (that is, you didn’t make your payments on time) before COVID, this extension will give you the opportunity to make up for it. You can do your best to make these late payments without having to make new ones.

• Utility loan forgiveness: If you are in the process of qualifying for this type of loan forgiveness and are still able to work and make payments, be aware that any payments you make during this period will still count towards your 120 necessary payments. . Take advantage of the 0% interest rate and keep paying off your loans.

• Private student loans: If you have taken out private student loans, this extension does not apply to you since your loans do not come from the federal government. But it’s always worth talking to your lender and asking for an extension or some other type of plan if your finances have taken a hit.

It’s always a good idea to check with your lender to make sure you still meet all of the requirements and see if there is anything else they can do to help you during this season.

What you can do to repay loans

Remember, the extension will not get rid of your debt. It will just extend your repayment period and (hopefully) help you if you are in financial difficulty. Times are tough, but if you can put a solid plan of action in place, you can get rid of those student loans faster than you think.

Here are some practical steps you can take to pay off your loans based on your current financial situation:

• If your income is stable, continue to crush your monthly student loan payments. Pay more than the minimum payment if you can! Or, if you are using the debt snowball to pay off your debts from smallest to largest and have smaller debts to eliminate before your student loan, then you can use the money you would have used. for your loans to get rid of your small debts faster during this period. Whatever you do, keep your debt attack mentality!

• If you have an income at risk, save an emergency fund of $ 1,000 as soon as possible and continue to make minimum payments on all your debts. If you are really in a difficult situation, put your student loan payments on hold during the extension period and save the extra money you have until you are able to earn a more solid income.

• If you’ve lost income, try to stay calm, put your debt on the back burner and make it your top priority to cover all four walls (food, utilities, shelter and transportation). Pick the side jobs available, sell what you can, and save the money left over until you get back on your feet.

• If you have more than one student loan, you might want to think about consolidating and refinancing them, but only if it doesn’t cost you anything to refinance, you can get a lower fixed interest rate, and you don’t. do not get a longer repayment period. This way, you will have more money available to continue to face your debt.

Let’s face it, this is a really strange time. But I know you can get out of it and come out stronger on the other side. For more details on how this plugin works (and how it can work for you), check out this item.