Many Americans who have outstanding student loans likely haven’t paid toward them since last spring – and they’ve been well within their right to do it.
As you may recall, student loan payments were paused as part of the first major coronavirus stimulus package that was passed by Congress and signed into law by President Trump last March. In addition to providing stimulus checks for American families, forgivable Payment Protection Program loans for businesses and relief for hard-hit industries, it also put a temporary pause on student loan repayments and froze debt so that it won’t accrue any additional interest for the time being.
President-elect Joe Biden has said that he plans to continue this pause of student loan payments, but we aren’t sure for how much longer. (Biden is also said to favor forgiving up to $10,000 in student loan debt per borrower, but that’s a separate story).
The bottom line is that at some point in 2021, borrowers are probably going to have to start making payments toward their loans again. And being that they may have spent much of 2020 not making them, this could be a difficult habit to get back into.
Being that some 42 million Americans have federally-held student loans, there could be a lot of people struggling to make ends meet as it stands now who will be forced to dig a bit deeper into their pockets soon. How can they get back to making these payments? Let’s take a closer look:
- If you can make the payments now, do it: While it can be tempting to see if Biden makes good on his pitch to forgive up to $10,000 in student loan debt per borrower, especially since the Democrats have control of both the House and Senate (with Vice President-elect Harris’ tie-breaking vote), experts say that if you’re able to make payments during this pause to do so. You’ll still be coming out ahead, as interest isn’t accruing on the loans, helping you pay down the debt faster.
- If you’re struggling to make ends meet, consider contacting your lender about economic hardship, unemployment deferment options or an income-driven repayment plan. It’s one reason why any borrower should be hesitant to consolidate federally-held loans to private ones, as you’ll lose many of the protections that are in place to ensure you’re able to adequately repay said loans. Lenders are almost always happy to work with you if you’re able to provide the appropriate documentation and proof of your situation.
- Don’t fret if you’re pursuing Public Service Loan Forgiveness. Instead, know that these months included in the pause will count toward the 10-year period until your loans are forgiven through the program.
Some experts are hearing the pause will last at least until April. Others believe that it will be extended through September. Regardless of how long it lasts, start planning now so you make sure you’re able to make the payments when the pause ends.