Editor's Note: The Biden Administration has extended the pause on federal student loan repayment through May 1, 2022.
At the beginning of the pandemic, federal student loan repayments were paused to address the financial hardships many Americans were faced with. Since the economy is recovering, the Biden administration is not extending student loan relief any further and borrowers will have to start making payments again after Jan. 31.
Student loan advisors suggest borrowers prepare themselves for repayment ahead of time. Here are some steps you can take to make sure you’re ready.
Make sure your contact information is correct.
Loan servicers will be sending out information and notifications to prepare borrowers for repayment, so check your contact information and update it if necessary to ensure you don’t miss anything.
You can find your loan servicer and update your contact information at studentaid.gov.
Open your mail.
Loan servicers may send notifications electronically or through the post, so it’s important to get into the habit of opening all of your mail.
Evaluate your payment plan.
You can find your current balance and payment amount at studentaid.gov. If the payment amount is not manageable for you, now is a good time to submit the paperwork to switch to a different payment plan.
Information about different repayment plans can also be found at studentaid.gov. The Federal Student Aid Office of the Department of Education suggests using their loan simulator which can show you what repayment plans might be best for you based on your repayment goals.
Borrowers interested in applying for Public Service Loan Forgiveness should be aware of a limited waiver through Oct. 31, 2022 which makes some previously ineligible loan programs, loan types, or repayment plans eligible for PSLF. More information, resources, and necessary forms can be found at studentaid.gov.
Get back in the habit of making payments.
If you have not been making payments over the past two years, it may be difficult to start again. Betsy Mayotte, the president of The Institute of Student Loan Advisors, says making student loan payments is a habit just like any other.
“I compare it, at least for myself, to going to the gym. It takes about three weeks where it sort of becomes autopilot for me to go to the gym. And if I even take a week off for a business trip or vacation or holiday, it’s very difficult to get back into that habit,” Mayotte says. “And this is not a lot different than that.”
Make a budget.
Student loan advisors suggest making a budget in preparation of student loan repayments. Melissa Neal, the executive director of the Oklahoma College Assistance Program, suggests making a budget with student loan payments factored in and if possible, setting aside the money you will be paying each month in a savings account.
“It may feel weird to make that monthly payment towards your student loan again. So, consider putting your estimated loan payment amount in savings each month,” Neal says. “Then, when payments officially resume, you're already set up with the habit of not relying on that money for other expenses.”
Avoid scams.
Borrowers should be on the lookout for different student loan scams. Common scams involve promises of a grant or scholarship, promises of credit repair for borrowers, and promises of loan relief. Many scammers will request your personal information over call or text and pressure you into acting quickly. While asking for payment upfront to help with your loans does not necessarily signify a scam, student loan advisors want to emphasize many services for borrowers are free of charge.
Know what resources are available to you.
There are many free and reliable resources for borrowers who need help or have questions about their student loan repayment. Apart from the Federal Student Aid website, there is The Institute of Student Loan Advisors website which provides student loan advice and education at no cost. Go to freestudentloanadvice.org.
The Oklahoma College Assistance Program’s Ready Set Repay website has free information and resources for all stages of student loan borrowing. Go to readysetrepay.org.
OCAP also has budgeting tips and financial literacy help which can be found at oklahomamoneymatters.org.
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