In August, President Joe Biden’s administration announced another extension to the 31st
AUGUSTA, Maine – If you have a college degree in debt, you may have received an email this week from your state student loan administrator reminding you that payments will resume in about three months. It’s a different way that post-pandemic life is returning to some sort of normalcy.
In August, the Biden administration announced that it would extend the federal government’s suspension of payments one last time to January 31, 2022. After that date, all repayments and accrued interest and recoveries on loans that were in default before the break will resume. For many, this means that the next payment is due in February or March. Therefore, experts want to make sure you are prepared.
“It will be almost two years before borrowers have to start making payments and they really need to restore their loan repayment habits every month,” said Mary Dyer, financial education program manager for the Maine Treasury Department. “For many borrowers, that loan payment may have been diverted to other expenses and so it will be a little more difficult to recover.”
RELATED: Yes, the Biden Government Eliminated More than $ 9 billion in student debt, but that’s less than 1% of total student debt
Dyer has some tips for borrowers preparing for this change. They include:
- Contact your student loan service provider to ensure that the contact details are current and up-to-date. Dyer says that now you can and should persevere as service providers are likely to deal with many borrowers in similar positions.
- visit studentaid.gov and log in with your federal student ID to update the contact details there as well. Dyer says this way that your servicer can easily reach you if necessary. There is also a loan simulator tool on this website that you can use to explore different repayment plans. This is especially useful if you have trouble making your first payment.
- Find out what your projected payments and due dates could be by contacting your service provider. If you can, it might be easiest to set up automatic payments to restore and keep the habit of paying regularly.
- Be proactive by now setting aside the monthly payments to get back into the routine and make sure you have the cash on hand. It’s important to make consistent, on-time payments.
RELATED: ‘It Will Create Much Confusion’ | Millions of student loans will be without servicers by the end of 2021
Dyer believes there will be some challenges as there are approximately 42 million student loan borrowers nationwide and this two year hiatus has been unprecedented.
“If you do the gym analogy, once we get into the habit of going to the gym every day, we get into a really good groove,” explained Dyer. “Then as soon as something happens that takes a break, be it vacation or something that breaks that habit, it’s so hard for us to get back on track, and student loans are very, very similar in that sense. “
RELATED: US Cancels $ 5.8 Billion Student Loan For Disabled People
Dyer said that some borrowers may still be in economic hardship and there are other options if you cannot repay your loans right away. You can find out about this through your servicer. She said you should start paying off other debts, adding more money and savings, and building an emergency fund. If you have federal and personal loans, you should compare their interest rates and try to pay more on the loan at the higher interest rate.
Dyer said borrowers should also be wary of student loan scams. When you receive a phone call from a company that promises to provide you with credit and repayment assistance, be careful and check with your servicer or FAME before doing anything.
RELATED: Student Loan Payment Pause Extended By Biden Administration To 2022
FAME offers a number of financial wellness tools that are available online. You can learn more about these by clicking here.