As you may be aware, the federal student loan forbearance, implemented in March 2020 as a pandemic relief measure and scheduled to end on May 1, was extended for the sixth time.
So What Does This All Mean For You Now?
- Monthly loan payments are suspended on federally-held student loans through August 31
- Interest accrual is suspended on federally-held student loans
A new exciting feature was also announced with this extension — a “fresh start” for student loan borrowers in default. Defaulted student loans will be automatically rehabilitated so that all borrowers re-enter repayment in good standing.
While you may be tempted to use this reprieve to forget about your college loans, we do encourage borrowers to take this time to actively prepare for re-entering repayment on September 1.
Here’s What You Can Do to Prepare:
- Read all mail, email, texts, and other correspondence from lenders and loan servicers
- Verify your loan servicer here: https://studentaid.gov/h/manage-loans
- Ensure your contact information is up to date with your servicer
- Review new payment expectations — due dates and repayment terms
- Make any payments you can to continue to reduce your federal student loan balances
- Focus on other higher balance/interest rate debt and take advantage of the time out.
Another new component in this extension states that $0 monthly payments during the forbearance count towards the 120-payment count for qualifying borrowers working towards Public Service Loan Forgiveness.
What Does This Mean if You Want to Take Advantage of Public Service Loan Forgiveness (PSLF)?
- See if you qualify — employees who have Federal Direct student loans and work for the U.S. federal, state, local, or tribal government or a non-profit organization may be eligible
- Look at the different programs: standard PSLF, PSLF Limited Waiver, and TEPSLF
- Figure out timelines and create a repayment strategy
Learn more about your student loan servicers and recent changes in a previous blog post here.