How to prepare for the restart of student loan payments

WASHINGTON – The holidays can get expensive quickly. For many Americans, however, the real wallet impact may not kick in until after the New Year, when several pandemic-related government programs expire.

WHAT WAS GIVEN IN 2021

Most Americans received a lot of government assistance over the past year.

$ 2,000 stimulus checks were mailed and an expanded child tax credit of $ 1,500 to $ 1,800 per child was placed in parents’ pockets. Additionally, student loan payments were suspended in 2021 – the Federal Reserve estimates the typical student loan payment to be around $ 393 per month.

END THE HELP

The reality is that much of the government aid that was put in place at the height of the pandemic is about to end.

Stimulus checks have long been spent and there are no more.

The extended child tax credit also expires this year. Efforts to extend tax credits into next year have stalled in Congress, which means no checks will be written in January.

Student loan relief is also due to expire in January. White House press secretary Jen Psaki almost confirmed last week that President Joe Biden has no plans to extend the payment moratorium.

“It expires on February 1st, but right now we are making a number of preparations,” Psaki said at a recent briefing.

PREPARE NOW

So what should families do now to prepare?

“You should create a descriptive budget for your spending patterns,” said Mark Kantrowitz, a student loan finance expert.

Kantrowitz says it might sound obvious, but spending tracking can save families a few hundred dollars by uncovering unnecessary spending patterns that may be enough to resume student loan payments.

Next, Kantrowitz says that borrowers should contact their student lender immediately to make sure their contact and bank account information is still correct.

If you have a really hard time of it, you can also inquire about cases of financial hardship.

“Register now because there will be a rush of people trying to call the lender at the end of January and you don’t want to wait indefinitely,” said Kantrowitz.

The good news is that the Biden administration introduced several exemptions over the past year designed to make it easier for those who have participated in the public service to waive their student loans. Borrowers must have worked for the government or a nonprofit to qualify, but many have been turned down for technical reasons in recent years. Kantrowitz says that has changed.

“There have already been reports that borrowers are not only receiving qualified loan waiver due to previous payments, but are even receiving reimbursements for overpayments,” said Kantrowitz.

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