The current pause on federally-held student loans is ending on September 30. That means that any borrowers will again be on the hook for payments and interest rates will take effect again. And as the economy takes off and unemployment rates continue to decrease, it’s very likely that this will indeed be the end of the pause on student loans. In fact, if you still have outstanding student loan debt, you may have already received a call from the lender making sure you know when the pause is set to end and helping you understand what your obligations are when it does expire.
If that’s not enough of an indication that this pause is highly unlikely to be extended, then we don’t know what is.
Anyway, it’s time to get ready to start paying back against this debt soon, and we’ve answered some frequently asked questions to help you do it. Here’s a closer look:
How should I prepare to begin paying toward student loans?
The best thing you can do is start now and consider the next few months leading up to the September 30 deadline as your trial run to make sure you’re able to adjust your budget and make the payments as necessary. If you can’t, then be sure to reach out to your lender and see if you can enroll in an income-driven repayment plan or if you’re able to secure an extended grace period.
What if I’ve been paying my student loans even during the pause?
If you’ve continued to pay during the pause, that’s great news. It means you’re likely to spend less money on repayments over the long-term due to the 0 percent interest rate that was in effect throughout the pause. This means that during the pause, your loans were not accruing interest, so anything you paid down during this time certainly helps.
There continues to be talk of the federal government taking executive action to forgive some amount of student loan debt. What’s the latest on that?
Our initial thought around the time President Biden took office was “we’ll believe it when we see it.” But then we were intrigued when the American Rescue Plan’s passage had a stipulation that stated that any forgiven student loan amount would not be considered taxable income. The last we heard, Biden has ordered members of his cabinet to study various student loan forgiveness amounts. While some Democrats have asked Biden to consider forgiving up to $50,000 via executive action, Biden has said on the record that he’s more in favor of forgiving a lesser amount in the $10,000 neighborhood.
Is there anything else I should do to prepare?
You might contact your lender or log into your online account just to make sure all your information is up to date. This is especially important if you’ve moved recently or if your situation has changed. After all, it’s likely been a while since your lender last heard from you.