ICYMI: federal student loan emergency payment suspension has been extended to January 31, 2022.
So what now?
If your answer is “wait until it’s extended even more,” you might want to think again. While this is the fourth time the payment freeze has been extended, Education Secretary Miguel Cardona was firm in his statement that it will be the last. And because chances for widespread student debt cancellation are looking pretty unlikely, you should count on resuming payments in February.
So how should you use your final six months of student loan forbearance?
Reconnect with your loan servicer.
At the minimum, get in touch with your loan servicer to confirm that your address and contact info are up-to-date (especially if you relocated during the pandemic) and that you’re set up to auto-pay your monthly bill (you’ll probably need to re-verify a payment method).
Everyone should be on the lookout for updates from their loan servicer right now, but this is especially important if your loans happen to be serviced through FedLoan or Granite State. Both servicers have announced they won’t renew their contracts with the Department of Education at the end of 2021, so affected borrowers need to watch for news about how and where their loans will be transferred.
Review your repayment plan.
If you’re not already on an income-driven repayment (IDR) plan, check to see if you’re eligible. IDR plans can lower your monthly bill and get you on track to eventually receive debt forgiveness — not to mention it’s super simple to find, compare, and enroll in IDR plans through our Reassess tool.
Make extra payments.
The interest rate for federal student loans is still 0 percent, so any payments you make during the freeze will go directly to your principal — and that could mean becoming student debt-free sooner.
If you want to get ahead on your paydown but don’t want to eat into your budget, check out our Giveback and Round Up tools that convert cash back rewards and spare change from everyday purchases into student loan contributions.
Focus on other financial goals.
If you’re one of the 60 percent of Americans who say that the pandemic has made them realize just how little they save, take note. Without the expense of student loan bills, now could be the perfect time to zero in on savings goals like building a rainy day fund or starting a retirement account.