Collection actions on defaulted loans were halted. So was negative credit reporting for eligible federal student loans, meaning the Education Department reported suspended payments to the major credit bureaus as if they were made on time.
But the pandemic-related relief is scheduled to end on Sept. 30. Even if the forbearance is extended, here’s what you need to know.
Frequently Asked Questions
When will I have to start paying my student loans again?
If you were eligible, your payment pause should have started in March 2020. It was supposed to last just six months. However, following a series of executive orders, the payment moratorium was extended to Sept. 30, 2021. This means your first payment would be due in October.
It’s important to remember that date. A study by Pew Charitable Trusts found 52 percent of borrowers affected by the pause were unsure when they would be required to resume payments.
Pew said its findings show that many borrowers will need assistance transitioning back to repayment.
How likely is it that there will be another extension?
The Biden administration is under pressure to extend the forbearance for federally held student loans, especially in light of the recent extension of the eviction moratorium for renters.
Many borrowers say they are still having trouble managing their bills as a result of the pandemic, according to the Pew study. Two-thirds of borrowers who took the survey this spring said it would be difficult to afford their student loan payments if the payment suspension ended the following month.
There is also concern that with the number of coronavirus cases increasing because of the delta variant, businesses will have to shut down or scale back, resulting in a rise in the number of people out of work.
In a letter to President Biden, Democrats in the House and Senate argue that restarting payments may result in a wave of student loan defaults.
“The scheduled resumption of student loan payments in October could create a significant drag on our economic recovery,” the lawmakers wrote, urging Biden to extend the pause by at least six months, until March 31, “or until the economy reaches pre-pandemic employment levels, whichever is longer.”
Things are changing quickly, so it’s possible another pause will happen, but the prudent thing to do is prepare yourself for a restart of your payments.
Is there anything I should do whenever loan repayments resume?
Your servicer should contact you before the forbearance is over to confirm when you need to start making payments again. However, if you don’t receive any communication, contact your servicer to make sure you know your due date.
A lot of people moved during the pandemic. You may have moved in with your parents or a family member, or relocated to save money.
It’s important that you contact your loan servicer and update your address. Don’t assume that because you haven’t been contacted you aren’t responsible for resuming your payments. You risk accumulating late fees and perhaps even defaulting on your loan if you fail to restart making your monthly payments.
It is your responsibility to pay your loans on time, even if the lender doesn’t know how to find you.
Keep in mind, if you had set up automatic payments, they may resume on your first due date when the forbearance period ends.
What should I do if I can’t afford my payment?
If you haven’t already, ask your loan servicer about enrolling in an income-driven repayment (IDR) plan. Depending on your income and family size, under an IDR, your payment might actually be zero.
You can get an estimate of your monthly payment under different IDR plans by going to studentaid.gov.
If you were already in a plan and your income or family size has changed, you can request that your payment be recalculated, which could reduce what you owe each month.
Was it a mistake to take advantage of the forbearance when I could have afforded to make my payments?
Many people needed the break.
But many borrowers not affected financially by the pandemic kept making their loan payments — because, at zero percent interest, all the money went directly to reducing the loan principal (once any interest that accrued before March 13, 2020, was paid). This was a smart money move.
Some people took the opportunity to catch up on some bills or concentrate on paying down high-interest credit card debt. And that’s fine. But it was a mistake to take the payment holiday if you could afford to make the payments and you didn’t have any other pressing financial issues.
It wasn’t necessary for folks working toward Public Service Loan Forgiveness to continue making payments. Under the PSLF program, the remaining balance of a borrower’s debt is forgiven after 120 qualifying monthly payments.
If you qualify for PSLF, the suspension of loan payments didn’t put you behind. It was as if you made on-time monthly payments.
I received an email from a company offering to help reduce my student loan debt. Is this legit?
Here are three signs of a debt scam, according to the Consumer Financial Protection Bureau (CFPB).
·You’re asked for an upfront fee to help you sign up for an income-driven payment plan.
·You’re promised quick debt forgiveness.
·You’re required to provide your Federal Student Aid identification, or FSA ID, which is the username and password you use to log on to Education Department student aid websites. Do not give this information to anyone.
Do not pay anyone to do something you can do yourself. Your loan servicer can walk you through the various repayment options. And if you feel you aren’t getting the assistance you need, file a complaint with the CFPB at consumerfinance.gov.
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