In one of his first acts as President, Joe Biden asked the Department of Education to extend the administrative forbearance period for Federal student loans through at least September 30, 2021. This means Federal student loan payments will remain paused, with interest rates set to 0% and collections halted on defaulted loans. The Department of Education formalized the request to extend student loan relief in a press release on Thursday, January 21.
Here is a timeline of the relief efforts for student loan borrowers since 2020:
- March 27, 2020: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. This originally enacted the relief efforts above.
- August 8, 2020: Through Executive Order, President Trump extended the relief efforts through December 31, 2020.
- December 4, 2020: The Secretary of Education extended the relief deadline through January 31, 2021.
The December extension enabled an Executive Branch transition through a period that included Biden’s inauguration. Prior to being sworn in, Biden signaled several new policies may be forthcoming during his term.
The latest relief extension undoubtedly helps many student loan borrowers during this global pandemic. According to a Pew study, 58% of borrowers would find it difficult to resume making payments at this time. If you find yourself in this majority, there are several options to potentially lower your monthly payment.
Lower Your Monthly Payment
You could consider the following options to lower your monthly payment or request a further extension:
- Income-Driven Repayment (IDR) Programs: According to Pew, 75% of borrowers have heard of IDR programs. But, “the process for updating this data is complex.” FutureFuel.io digitized a free solution called Reassess that enables borrowers to discover, select and enroll in IDR plans in 6 minutes or less. These plans may also include loan forgiveness.
- Deferment: If you need to temporarily reduce or postpone your monthly payments, you could explore putting your loans into a status called deferment.
- Forbearance: Another way to reduce or postpone your monthly payments is by requesting forbearance. Interest will accrue despite payments being paused so you will end up paying more in the long run.
Keep Making Payments
If you are fortunate enough to be able to make your monthly payments, keep doing so! With Federal student loan interest rates set to 0% and payments paused, every payment you make will be applied solely to the principal balance. This means your payments effectively save you double!
The FutureFuel.io platform has specific tools to accelerate your paydown period:
- Giveback: Harness your purchasing power to earn cash back from 450+ mega brands like Walmart, DoorDash, Petco, Ace Hardware and more. Put merchants to work as you earn cash back on everyday purchases.
- Round Up: Sweep spare change from everyday purchases straight to student debt. The average user saves $4,900 in interest and 23 months off their loans with $20/month in Round Ups.
- Auto-Crush: Schedule one-time or recurring payments to your loans. Save an average of $13,500 and become debt-free 4 years sooner with an extra $50 payment per month
Student loans continue to be one of the hottest topics in legislation. One of the best things you can do is keep following the news to understand changes that impact your loans. FutureFuel.io will keep you abreast of these pertinent policies. Plus, you can leverage FutureFuel.io’s platform to find solutions to lower your monthly payment or pay back your student loans faster.