This article has been updated to reflect the extension of federal student loan relief through September 30, 2021.
Part of the CARES Act that was signed into law in March 2020, in response to the COVID-19 pandemic, included relief for federal student loan borrowers (there was no legislation specific to private student loan debt). The legislation automatically and temporarily stopped loan payments and accrual of interest for federal student loans. The intent of this legislation was to provide relief to federal student loan borrowers who were financially impacted by the pandemic.
The forbearance has been extended as the pandemic continues to have an economic impact. In January 2021, President Biden directed Congress to extend the 0% student loan interest rate and suspension of payments on federal student loans until September 30, 2021.
While the relief will temporarily continue, it may impact your financial situation when it ends, so take action now to be prepared.
The temporary stop of monthly payments doesn’t prevent borrowers from making regularly scheduled payments or putting additional funds toward the debt in order to pay down the balance. Whether you have continued to make payments or took advantage of the forbearance, it is important for all federal loan borrowers to stay informed of the requirements around resuming payments.
Forbearance is only temporary and is currently scheduled to end September 30, 2021. Borrowers will begin receiving notices from federal loan servicers in the coming weeks with details on your specific payment terms. Be sure to read these notices, as they will contain crucial information to ensure your loans stay in good standing. The forbearance was automatic, but any future adjustments to payments will need to be requested through your federal loan servicer.
It's time to start planning
Your federal loan servicer will provide specific details on when your payments are due and additional options available to you. But, if you were impacted by the pandemic, you may be in a different financial situation today than you were prior to forbearance, and you should evaluate your budget to understand what adjustments need to be made to be able to afford your payments.
Begin your budget review by making three lists: loans and credit cards, living expenses, other monthly expenses. This will give you an idea of where your money is going each month. If you are using your INTRUST Bank checking account or debit card to pay bills, you can find expense information quickly by reviewing your account activity in mobile banking, online banking, or last month’s statement.
- Loans and Credit Cards: This list should include all required minimum monthly payments, including your federal student loan payment. It is not necessary to organize these by largest balance or highest interest rate, as you’re only calculating the monthly expense.
- Living Expenses: This list should include all required monthly expenses, such as groceries, gas for your vehicle, car insurance, rent, utilities, phone bill, childcare, and any other monthly expenses that are a necessity for your household.
- Other Monthly Expenses: This list should include monthly expenses that are not a necessity, such as subscriptions, cable, movie streaming services, retail services, magazines, and memberships.
Calculate the total of all three lists to determine your monthly expenses. Then subtract this amount from your monthly take-home pay (your household income minus withholdings and taxes) to discover your disposable income, which is the money you have leftover each month to spend or save after meeting all financial obligations.
This budget information will help you understand if you can afford to resume your normal federal student loan payments. If money still looks tight, you should first consider cutting back on non-essential expenses, at least temporarily, and then evaluate if you need to request additional financial assistance from your federal loan servicer.
Know your options
Your best option is to communicate with your federal loan servicer before the end of forbearance if you believe you are unable to resume your normal monthly payments. Your federal loan servicer can provide you with available options, which could include consolidation, loan forgiveness, or income-driven repayment plans. Ignoring notices of resuming payments will only negatively impact your credit score, and you will still be responsible for the debt and any accrued interest and late payment penalties that your federal loan servicer applies.
Contact your federal student loan servicer directly for reliable information about your loans and payments. Their contact information should be listed on your monthly statements. If you have moved or changed your contact information since March 13, 2020, you should contact your federal loan servicer immediately to update your information to ensure you receive timely notices.
You can also visit the Federal Student Aid website for information pertaining to CARES Act forbearance legislation. This site is continually updated and includes information such as which loans qualified for the 0% rate, how you know when to start making payments again, and how any loan payments made during forbearance are applied.
Avoid a scam
You should never pay for assistance with your federal student loans. Your federal loan servicer will provide free help with your questions and any forgiveness options. Any offers you receive to assist with debt that require a payment or providing your bank account information are a scam. Read our article on protecting yourself from coronavirus scams for more security tips.
Help from INTRUST
INTRUST Bank is not a federal student loan servicer, and we are unable to provide information specific to your federal student loans and payment requirements. If you have a personal loan through INTRUST Bank and require financial hardship relief, please complete this online form to reach a member of our team for assistance.
You can also visit our blog for more articles on financial education, including:
This article is for informational purposes only and is based on details provided by Federal Student Aid website. To learn more, visit the Federal Student Aid website.