Federal student loan payments are set to begin again soon
CEDAR RAPIDS, Iowa (KCRG) - Mandatory payments of federal student loans are set to start up again after January 31 after the federal government suspended those payments back in March because of the pandemic.
There is a chance the Biden administration could suspend payments even longer, but borrowers should plan to start their payments again soon since that’s not guaranteed. More than 420,000 Iowans have student loan debt according to educationdata.org, with the state average being $30,500.
Denise Fuller, the Manager of Financial Counseling at Horizons, A Family Service Alliance, in Cedar Rapids, said it’s especially important for people who have had a significant change in income during the pandemic to start planning for their student loan payments. She said there is always the option of doing an income-driven repayment plan which takes into account your household size and income to set your monthly rate.
”Definitely if you’ve had a change and that income is significantly lower or there is no income right now, definitely reach out to your loan servicers to get that payment adjusted,” Fuller said.
Fuller said some income-driven plans will set your monthly rate at $0 depending on circumstances. It is important to note you will continue to rack up interest if your payment does not at least cover that.
If you have been making your payments during the pandemic you are benefiting from no interest so your entire payment has been going toward your principal on the loan. This has allowed those who made the payments to get further ahead in their repayment plan during that time.
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