The looming fear of your student loan payments beginning again before you can start paying for them may frustrate and frighten you—especially if the pandemic has halted your job search.
While the future is unwritten, there is a chance that student loan payments may start again in January of 2021. If that is the case, knowing how to prepare for student loan payments in 2021 will ready you for the worst-case scenario.
Stay Updated on the News
As of right now, the administration is not set to renew the administrative forbearance on federal student loans. The original agreement in the CARES Act set the forbearance’s expiration date for September 30, 2020; however, it was since renewed to last until the end of the year.
Worried unemployed or underemployed students and graduates with federal loans have voiced their concerns about the silence concerning the further extension of the CARES Act’s forbearance, only to be met with the news that the current administration will not extend it even if the pandemic continues.
Educate yourself on how the CARES Act affects you and your loans, especially if you have limited income and a tight budget. If the government extends the forbearance, it is likely that it will retain the same rules and benefits.
When the new administration takes over, watch carefully to see their statement on federal student loans and the forbearance or forgiveness of these same student loans.
Tighten the Budget
If you have a budget, you may not include student loan repayments right now due to the administrative forbearance. Before the payments are at risk to start up again, make sure they fit into your budget.
You may need to adjust the areas of spending. Prioritize the necessities first before focusing on your student loans. While it’s important to pay them off as soon as possible, it may not be feasible.
The federal government has options for finding federal student loan repayment plans that you can afford in any financial situation. You may not need to go back to the same monthly repayment amount that you could afford pre-pandemic.
other valuable tips:
Update Your Income for Your Income-Based Repayment Plan
As the year flew by, you may have forgotten to update your lender with any changes to income. If you have an income-based repayment plan, this is essential for how to prepare for student loan payments in 2021.
Updating the lender with the correct employment (or unemployment) information ensures that you only pay what you can afford—sometimes this payment is $0. If the payment is $0 due to unemployment, remember that interest will still accrue. It’s important to update your income information as soon as it changes.
Image Credit: prepare for student loan payments by envato.com
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