Do these 3 things for your student loans now
Here’s what you need to know.
With student loan relief coming to an end, it is time for you to take control of your student loans. Temporary student loan forbearance – which Congress created in March 2020 in the wake of the COVID-19 pandemic – will expire on January 31, 2022. This means that student loan borrowers will resume federal student loan payments at their regular interest rate beginning February 1, 2022. (Prepare for the End of Student Debt Relief). After 22 months of optional federal student loan payments, millions of student loan borrowers will make their first federal student loan payment in nearly two years. Here are 3 things to do now.
1. Determine If You Eligible for Student Loan Forgiveness
Find out if you qualify for student loan forgiveness. President Joe Biden has canceled $11.5 billion of student loans since becoming president. This month, for example, the US Department of Education said a $2 billion student loan would be canceled within weeks. There are many different opportunities for student loan forgiveness, including:
- Income Driven Repayment Plans
- Public Service Loan Waiver
- total and permanent disability
- Borrower Defense for Repayment
If you are pursuing public service loan forgiveness, make sure you get an exemption for limited student loan forgiveness. (How to Apply for Student Loan Forgiveness During the Biden Administration). Why? If you have any prior student loan payments that were ineligible for student loan forgiveness, you have until October 31, 2022 to receive “credits” for these payments and get closer to canceling the student loan. (Here’s who qualifies for student loan forgiveness right now).
2. Find out if you’re getting a new student loan servicer
If you are one of the approximately 16 million student loan borrowers, you may find a new student loan servicer next year. Your student loan servicer is the company that collects your student loan payments and acts as customer service for your student loans. Multiple student loan servicers have announced that they will no longer service federal student loans. For example, Navient will no longer repay federal loans by the end of the year and Maximus will instead become your new federal student loan servicer. (This is why Navient took off your student loans). If your student loan servicer is changing, the US Department of Education will send you a written communication. If you get a new student loan servicer there is no need to worry. Your interest rate and loan terms will remain the same. However, be sure to update your Autopay information to ensure that you send student loan payments (one-time instructions to do so) to your new student loan servicer.
3. Consider Refinancing Student Loans
Student loan refinancing is a smart way to save money on your student loans. With student loan refinancing, you can get a lower interest rate, a lower monthly payment, or both. Now that temporary student loan forbearance is coming to an end, student loan refinancing can help you save money while student loan payments resume.
This student loan refinance calculator Shows you how much you can save when you refinance student loans.
You can refinance a private or federal loan, or both. To qualify, you’ll need to have a credit score of at least 650, be currently employed or have a signed job offer, have a stable monthly income, and meet other requirements. Student loan refinance rates are very low right now and start at 1.74%. However, student loan refinancing is not for everyone. For example, if you think you’ll need an income-driven repayment plan, forbearance, deferment, or public service loan forgiveness, you might not want to refinance your federal loans. When you refinance a federal loan, you’ll get a personal loan instead. That said, the low interest rate and saving money on your student loans may be more important to you than the benefits available to federal student loan borrowers.
Make sure you understand all your options for student loan repayment. These 3 things are smart for your student loans right now. Here are some popular strategies for paying off student loans faster:
Student Loans: Related Reading
If you want student loan forgiveness then do these 5 steps
How to Apply for Limited Student Loan Forgiveness
Education Department to cancel $2 billion student loans
Here’s Who Eligible For Student Loan Forgiveness Right Now