Preparing for student loan payments to resume
CEDAR RAPIDS, Iowa (KCRG) - The Biden Administration has made it clear that student loan repayments will resume in February. That means more than 40 million borrowers will have to resume monthly payments for the first time since the pandemic began.
In March of 2020, The U.S. Department of Education suspended payments with 0% interest and also stopped collections on loans in default. Borrowers can still make payments during the pause, and those payments will be applied to the principal balance, paying down the debt faster.
The Department of Education offers advice to help borrowers prepare to resume payments. There are different servicers for federal student loans, so check with yours to make sure everything’s in line for payments to resume. It also suggests reviewing your repayment plan and consider your current situation. If you’ve lost your job or had a change in income, you may need lower payments to avoid default. Income-driven repayment plans may be an option for some, but borrowers need to apply before repayment begins. If you’re enrolled in automatic payments, you may need to confirm repayment status for those to automatically resume. That guarantees you’ll continue to get a 0.25% reduction in your interest rate. And finally, make sure you update your contact information.
The Department of Education has a website with more information on how to prepare for repayment.
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