If you’ve breathed a sigh of relief and temporarily removed federal student loan payments from your budget during the pandemic, you’re not alone.
In March 2020, when President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law, all federal student loans were placed in “administrative forbearance.” That means all federal borrowers were permitted to stop making monthly payments through Sept. 30, 2020, and the loans aren’t accruing additional interest during that period, either.
Unless the administrative forbearance is extended, we’ve got about two months until the clock starts ticking again — both on student loan interest and on mandatory payments. Here’s how to consider preparing.
Revisit your student loan portal.
Take a look at your balance, the interest that accrued this year and any other numbers that can help you plan. Set up two-factor authentication for additional security, and consider signing up for email alerts if you haven’t already.
While you’re at it, set up a monthly recurring calendar event or reminder — slated to start on the first due date after Sept. 30 — so that you’ll never miss a future payment.
Update your budget.
Take a close look at where your money’s been going over the past few months. How much money do you have coming in, and how much do you have going out? Is your current income regular (the same amount per a certain time period) or varied (depends on the project)? Has the amount you feel comfortable paying per month changed since the onset of COVID-19? These are all important questions to ask yourself to get a sense of your current financial picture. While you’re at it, it’s smart to revisit your credit score (you can access reports via SavvyMoney whenever you want, but also at AnnualCreditReport.com.)
“A lot of it is peace of mind because you actually know where your money’s going,” says Eugenié George, author of Our Money Stories: A Six Week No B. S. Financial Wellness Plan. “Right now, I’m going over my… financial goals. Because I’m looking at my student loan funds, now I’m able to problem-solve for the next six months.”
Call your student loan provider.
If your financial situation has changed during the pandemic, there’s a good chance you’ll be able to change your monthly payment amount or even sign up for a more flexible repayment plan. Ahead of Sept. 30, contact your loan servicer about available options for your individual situation. (If you’re not sure which company is your loan servicer, you can find out by logging into “My Federal Student Aid.”)
“Definitely call now rather than when September hits — just because the wait time right now is [already] long,” says George.
If you’ve got the funds, you can always start early.
Although payments aren’t mandatory during this period, people can still pay down their balance if they wish. In the long run, it’s even beneficial, since you’d be taking advantage of paying down your balance during an interest-free period (which will end when the forbearance is up).
“It’s just faster, and you actually don’t have to pay the interest,” says George. “That’s like if they gave you an interest-free credit card and they said, ‘You know what? Just pay off the debt and not the interest.’ I would do that in a heartbeat.”
With Hayden Field