Two years ago, the U.S. government put a pause on student loan payments and interest accrual as a COVID relief measure with the Care Act 2020. The pause was to end on May 1 giving borrowers less than a month to prepare, however today the Department of Education announced the pause will be extended to August 31, 2022.
What should you expect when payments and interest resume September 1st?
Here are 6 steps to make sure you’re equipped for student loan payments to resume:
- Changes to your contact information
Begin by logging on your loan servicer’s website and in your StudentAid.gov profile to review your contact information and make any necessary changes that may have taken place in the past 2 years.
- Get the figures on your next payment
While on your loan servicer’s website, check your auto-debt enrollment or sign up for the first time. When the pause ends, you will receive a statement from your servicer. This will inform you of the date your payment is due, the interest, and payment amount. Your payment will be due no sooner than 21 days from the time they send you this statement.
- Budget
Prepare a budget to determine how much you can afford in payments. Provided by Powercat Financial are budgeting tools to help identify your expenses and create a spending plan. This will help direct you in the next step, reviewing repayment plans. See https://www.k-state.edu/powercatfinancial/budgeting/ for a spending plan worksheet.
- Repayment Plan Options
Examine repayment plans to see what works best for you, your budget, your goals, and your needs. You can do this by reviewing StudentAid.gov/loan-simulator/ to review plans. Many people’s situations have changed over the last 2 years, so this is the best way to find what fits best for you. Even if you change your repayment plan, you can go back and change it again later if needed via your loan servicer.
- Short-Term Relief
If you can’t find a repayment plan that works for you, as a last option, contact your loan servicer to ask for short-term relief or see if you can qualify for an income-based repayment plan. Before making this request, check the loan simulator to see how it could affect your repayment.
- What if you don’t make your payment?
Understand what happens if you don’t repay your loan. If your loan payment is not paid for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. Delinquency will affect your credit score, making it harder to get credit. After 270 days, your delinquent loan goes into default.
- Do you know who your loan servicer is?
Your loan servicer is the company that handles the services on your loans, like the billing. You will need to know the servicer in order to go to their website and make payments, change your repayment plan, and other tasks related to your loans.
- Follow these steps to find your loan servicer:
- Log in and visit your dashboard on StudentAid.gov
- Find the section labeled “My Aid”
- Select “View loan servicer details”
You can keep current on news related to the status of federal student loan repayment via https://studentaid.gov/announcements-events/covid-19 in the event the pause is extended again.
Powercat Financial is a FREE, confidential financial counseling appointment with a peer financial counselor resource for all currently enrolled K-State students. If you have any additional questions about these areas, or if you have other financial questions, schedule a time to meet with us to create a budget, go over repayment plans, and help you get set up with your loan servicer.
Sami Thompson
Peer Financial Counselor
Powercat Financial
www.k-state.edu/powercatfinancial
