Federal Student Loan Deferment Is Ending Soon. Here’s How to Prepare

Federal Student Loan Deferment Is Ending Soon. Here’s How to Prepare

If you’ve breathed a sigh of relief and temporarily removed federal student loan payments from your budget during the pandemic, you’re not alone.

In March 2020, when President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law, all federal student loans were placed in “administrative forbearance.” That means all federal borrowers were permitted to stop making monthly payments through Sept. 30, 2020, and the loans aren’t accruing additional interest during that period, either.

Unless the administrative forbearance is extended, we’ve got about two months until the clock starts ticking again — both on student loan interest and on mandatory payments. Here’s how to consider preparing.

Revisit your student loan portal.

Take a look at your balance, the interest that accrued this year and any other numbers that can help you plan. Set up two-factor authentication for additional security, and consider signing up for email alerts if you haven’t already.

While you’re at it, set up a monthly recurring calendar event or reminder — slated to start on the first due date after Sept. 30 — so that you’ll never miss a future payment.

Update your budget.

Take a close look at where your money’s been going over the past few months. How much money do you have coming in, and how much do you have going out? Is your current income regular (the same amount per a certain time period) or varied (depends on the project)? Has the amount you feel comfortable paying per month changed since the onset of COVID-19? These are all important questions to ask yourself to get a sense of your current financial picture. While you’re at it, it’s smart to revisit your credit score (you can access reports via SavvyMoney whenever you want, but also at AnnualCreditReport.com.)

“A lot of it is peace of mind because you actually know where your money’s going,” says Eugenié George, author of Our Money Stories: A Six Week No B. S. Financial Wellness Plan. “Right now, I’m going over my… financial goals. Because I’m looking at my student loan funds, now I’m able to problem-solve for the next six months.”

Call your student loan provider.

If your financial situation has changed during the pandemic, there’s a good chance you’ll be able to change your monthly payment amount or even sign up for a more flexible repayment plan. Ahead of Sept. 30, contact your loan servicer about available options for your individual situation. (If you’re not sure which company is your loan servicer, you can find out by logging into “My Federal Student Aid.”)

“Definitely call now rather than when September hits — just because the wait time right now is [already] long,” says George.

If you’ve got the funds, you can always start early.

Although payments aren’t mandatory during this period, people can still pay down their balance if they wish. In the long run, it’s even beneficial, since you’d be taking advantage of paying down your balance during an interest-free period (which will end when the forbearance is up).

“It’s just faster, and you actually don’t have to pay the interest,” says George. “That’s like if they gave you an interest-free credit card and they said, ‘You know what? Just pay off the debt and not the interest.’ I would do that in a heartbeat.”

With Hayden Field

Articles
Loan Better
Loan Better

The coronavirus has left many people scrambling financially. If you’ve noticed a loved one struggling and decided to help them ou...

Read More

Dealing with Debt Collectors
Dealing with Debt Collectors

No one likes dealing with debt collectors. While in some cases, you can simply write a check and the situation is over, at other ...

Read More

Keep It Going
Keep It Going

With the coronavirus making a mess of finances, you might be wondering if you should let one of your credit cards sit for a bit. ...

Read More

Relief Packages
Relief Packages

Some credit card issuers are giving customers a break because of the coronavirus. However, you’ll likely have to do some work to ...

Read More

Pay Back
Pay Back

Colleges closed their doors because of the coronavirus. Now, some students are asking for a refund. It’s not surprising, especial...

Read More

What The Fed Interest Rate Cut Means For You
What The Fed Interest Rate Cut Means For You

On March 15, the Federal Reserve cut the interest rates for the second time in a month. The rate cut of a full percentage point ...

Read More

The Price You Pay
The Price You Pay

Aiming to rack up credit card rewards at any price is a dangerous game to play. It rewards behaviors that can ultimately be quit...

Read More

Refinancing Your Mortgage Without Tears
Refinancing Your Mortgage Without Tears

Have you seen today’s interest rates? If not, let me be the bearer of good news: 30-year fixed rate mortgages are averaging 3.66%...

Read More

Four Before
Four Before

With mortgage rates at their lowest point in years, you might be asking yourself if now is a good time to refinance the loan on y...

Read More

Website Terms of Service

Please read these "Website Terms of Service" carefully before using SavvyMoney Checkup ("site", "website"). Accessing this site, or making this site available to any third party, indicates that you have read and accept these terms.

  1. Materials. Materials in this site are copyrighted and all rights are reserved. Text, graphics, databases, HTML code, and other intellectual property are protected by US and International Copyright Laws, and may not be copied, reprinted, published, reengineered, translated, hosted, or otherwise distributed by any means without explicit permission.
  2. Links to Third-Party Sites. Linked, third-party sites from website are not under the control of the Licensor. The Licensor is not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites.
  3. Confidentiality of Codes, Passwords and Information. Licensee agrees to treat as strictly private and confidential any username, password, user ID, and all information to which you have access through password-protected areas of website.
  4. Maintenance. Licensor shall provide Licensee any new, corrected or enhanced version of the site as it becomes available. Such enhancement shall include all modifications to the site which increase the speed, efficiency or ease of use of the site, or add additional capabilities or functionality to the site, but shall not include any substantially new or rewritten version of the site.
  5. Limitation of Liability. Licensor shall not be responsible for, and shall not pay, any amount of incidental, consequential, or other indirect damages, whether based on lost revenue or otherwise, regardless of whether Licensor was advised of the possibility of such losses in advance. In no event shall Licensor's liability exceed the amount of license fees paid by Licensee, regardless of whether Licensee's claim is based on contract, tort, strict liability, product liability or otherwise.