Student loans are exposed, but here is what you should do.
You need to know – and what it means for your student loan.
Student loans are on hold, but you may be wondering what that means and what if you should be doing it. Let’s make it easy for you.
Student loans are on hold, but what does that mean?
President Joe Biden has suspended payments on federal student loans for an additional 90 days through May 1, 2022. (Because of this, Biden has extended the student loan facility). This is a continuation of the student loan moratorium that Congress added to the Cares Act in March 2020 as a student loan relief. President Donald Trump has extended this student loan relief twice through January 31, 2021, while Biden has extended this student loan relief three times. It is important that this temporary deferral of student loans only applies to government student loans (not to private student loans). If you have a federal student loan, you will not have to make a federal student loan payment until May 1, 2022. There will also be no recurring interest on your federal student loan or default student loan recovery.
Do I have to apply for a student loan?
No, you do not need to apply for this student loan relief. This is an automatic student loan facilitation for student loan borrowers with federal student loan. It’s also the same student loan relief that’s been available since March 2020.
Should You Pay Your Student Loans?
You may be wondering if you should pay your student loan during this time. You have two options for paying the federal student loan. First, you could do nothing and make federal student loan payments again in May. Second, you can make one or more optional student loan payments at any time until the student loan exemption ends. Why should you pay a student loan if you are not required to? The answer: You can reduce your main student loan balance, which can save you a lot of money. Since there is no new interest on your federal student loan, your student loan payments will first be used to pay off the outstanding interest. After you pay off the interest on the student loan, each dollar of your student loan payment will directly reduce your principal balance on the student loan. Student loan payments of any amount during Student Loan Facilitation can help you save money. While student loan relief ends on May 1st, there could be more student loan relief. (Further relief for student loans could look like this).
What about private student loans?
Importantly, this student loan relief does not apply to private student loans. You should therefore continue to make payments on private student loans. If you are having difficulty making private student loan payments, contact your student loan intermediary to discuss your student loan repayment options.
Are your student loans being canceled?
The question that student loan borrowers ask themselves is whether or not student loans will be canceled. (Biden extended student loan relief, but proponents really want student loan cancellation). This facilitation of the student loan as a result of the Covid-19 pandemic is not directly related to the cancellation of the student loan. Rather, this student loan relief focuses on the temporary deferral of student loans, which focuses on the federal student loan payment pause. If there is a student loan cancellation, the most likely route is for Congress to pass a largely student loan law. Alternatively, some argue that Biden has executive powers to cancel student loans for all student loan borrowers. However, Biden said he does not think he has such authority, nor did he say that he intends to cancel student loans for all student loan borrowers. It is possible for Biden to issue a full termination of the student loan, although any action taken by the executive is open to appeal in court. Alternatively, Biden may not issue a blanket cancellation of the student loan and end the student loan facilitation on May 1st as planned. (How to Qualify for Student Loan Auto Issue).
What Should You Do With FFELP Loans?
If you have FFELP student loans, they are federal student loans issued prior to 2010 and secured by the federal government but issued by banks and financial institutions. Many FFELP borrowers have been frustrated because they were excluded from student loan relief. One option for these student loan borrowers is to consolidate FFELP loans into one direct consolidation loan. This will convert your FFELP loan into a direct loan that can qualify for this student loan facility. Contact your student loan service provider or the US Department of Education for more information.
Should I refinance student loans?
If you want to save money, get a lower interest rate, and pay off student loans faster, then you should consider refinancing the student loan. Student loan refinancing rates are ridiculously low, starting at 1.74%.
This student loan refinancing calculator shows you how much money you can save when you refinance student loans.
For example, let’s say you have a student loan of $ 80,000, an interest rate of 8%, and a repayment period of 10 years. When you refinance student loans with a 3% interest rate and a 10 year repayment period, you can save $ 198 each month for a total of $ 23,776. Student loan refinancing allows you to refinance federal loans, private loans, or both. You can also choose between a fixed or variable interest rate and a term of 5 to 20 years for the student loan.
When you refinance, it’s not for everyone. You must be employed or have a signed job offer, a credit rating of at least 650, a stable monthly income, and enough monthly cash flow to pay debts and living expenses. You may not want to refinance federal loans during Student Loan Facilitation and instead want to refinance private student loans. You also won’t want to refinance federal loans if you need a federal repayment program, such as a federal loan. However, borrowers have focused on saving money to refinance both private and government loans, including during student loan relief.
Familiarize yourself with all of the student loan repayment options. From doing nothing to lowering the interest rate, you have several options. Here are some popular ways to get student loans paid off faster:
Student Loans: Related Literature
Biden extended the student loan facility, but proponents really want the student loan cancellation
Student loans could be suspended, but because of this, Biden has extended the student loan facilities
How to qualify for student loan issuance automatically
Biden will not cancel student loans until the student loan facilities have expired