How to Prepare to Resume Federal Student Loan Payments
In August, President Joe Biden’s administration announced a further extension of the hiatus on federal student loan payments, until January 31, 2022.
AUGUSTA, Maine – If you’re a graduate with debt, you may have received an email this week from your federal student loans manager reminding you that in about three months, payments will resume. This is another way in which life is returning to some sort of normalcy after the pandemic.
In August, the Biden administration announced that it would extend the break on federal student loan payments one last time until January 31, 2022. After that date, all repayments and interest accrual will resume, along with collections on loans in default before the break. . This means that for many, their next payment will be due in February or March. so the experts want to make sure you’re ready.
“Almost two years will have passed before borrowers need to start making payments again, so they will really have to get back into that habit of paying off their loans every month,” said Mary Dyer, program manager at financial education at the Ministry of Finance. Maine Authority. “For many borrowers, this loan payment may have been redirected to other expenses, so it will be a little more difficult to restore it.”
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Dyer has some tips for borrowers as they prepare for this change. They understand:
- Contact your student loan manager to make sure contact details are up to date. Dyer says you can do it now and you need to be persistent because agents are likely dealing with many borrowers in a similar position.
- Visit Studentaid.gov and sign in with your Federal Student Aid ID to update contact information there too. Dyer says that this way your repairman can easily reach you if needed. There is also a loan simulator on this site where you can explore different repayment plans. This is especially useful if you are having trouble making the first payment.
- Find out what your prepayments might be and when they are due by contacting your repairer. If you can, it may be easier to set up automatic payments to restore and maintain the habit of paying regularly.
- be proactive putting aside the monthly payments now to get back to the routine, and make sure you have the cash available. It is important to make consistent and on-time payments.
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Dyer says she anticipates there will be challenges, as there are roughly 42 million student loan borrowers nationwide, and that two-year hiatus was unprecedented.
“If you think of it sort of with the analogy of going to the gym, once we establish this daily habit of going to the gym, we get into a really good rhythm,” he said. explained Dyer. “Then as soon as something happens to put an end to it, whether it’s a 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. “
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Dyer said some borrowers could still face economic hardship and there are other options if you can’t pay off your loans right away. You can inquire about this with your service agent. She said you should start by paying off other debts, increasing what you have in cash and savings, and building an emergency fund. If you have federal and private loans, you should compare their interest rates and try to pay more on the loan with the higher rate.
Dyer said borrowers should also be wary of student loan scams. If you get a phone call from a company promising you loan forgiveness and repayment assistance, you should be careful and contact your service agent or FAME before doing anything.
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FAME offers a number of online financial wellness tools. You can read more about these by clicking here.