Student Loan Resuming: What You Need to Know and How to Prepare
The student loan pause, or the CARES Act forbearance, suspended most federal student loan payments and interest since March 2020. That pause is set to expire on August 31, 2023, with payments to resume in October and interest accumulation to begin in September. Loan servicers are required to notify you at least 21 days before payment is due.
1. Standard Repayment Plan – is the default plan for most student loans. You pay a fixed amount every month.
2. Graduated Repayment Plan – lower monthly payments that increase every few years as you expect your income to grow over time.
3. Extended Repayment Plan – fixed or graduated repayment option, generally lower monthly payments but will extend the number of years.
4. Income-Driven Repayment Plans – Income-Based Repayment (IBR), Income Contingent Repayment (ICR), Pay as You Earn (PAYE), and Revised Pay as You Earn (REPAYE). These plans will generally reduce your monthly payments but may prolong the duration of the loan.
5. Deferment or Forbearance – Temporary options due to economic hardship, unemployment, health issues, etc.
How to Prepare
1. Double check your loan details – many may find that their federal student loan is through a new provider. Check to make sure your information is correct, that your address and information are up to date, and that any previous forgiveness such as Public Student Loan Forgiveness has been applied.
2. Recheck your budget – because it has been over 3 years since loans were due, many may begin to feel financial constraints in the coming months as they have not properly allocated a portion of their budget to repayment.
3. Seek help when you need it – contact your loan provider or visit Here for more information.
For more information, reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at (618) 997-3436.