Amidst the craziness that was this past year, we heard a lot of talk about student loans, government relief on those loans, and the potential for extensions on relief to happen yet again. Some of you might be sitting and thinking this is great news. Yet another six months of no student loan payments! Do not get the confetti out too quickly, friends. Paying nothing on your debts for drawn out periods of time is not such a great thing in the long run. We will jump into why and help shed a little light on what is going on with COVID student loan relief.
What Is the Student Loan COVID Relief Extension?
Back at the start of the COVID-19 pandemic in March of 2020, the U.S. government stopped interest from accruing on student loans and temporarily halted payments. People who had lost their jobs or were furloughed were having a hard time making ends meet, so the government put off student loan payments and halted interest in efforts to make things easier in a time of crisis.
When Will Student Loan Relief End?
As of right now, student loan relief will end on the last day of January 2022. This means that your payments will come due in February. See here for the statement by President Joe Biden on the official White House website. The good news here is that you have some months to prepare before student loan relief ends in 2022. Do not be shocked and surprised when those payments hit again in the new year! Consider this your heads up. And the truth is, you’ve got plenty of time to get your plan of action ready.
The Benefits of Starting to Pay Back Your Student Loans Now
The best thing you can do to prepare for the end of student loan relief is to start making those payments now. We know, this sounds a little bit odd: Why should you pay your student loan payments if they’re on pause? This is because the interest is at a standstill. And right now, you can keep making those payments and not pay any interest! Zip, zero, nada! Your payment goes directly toward knocking down the principal amount—and that is a big deal. Now is the time to keep up with the payments and make some serious progress on paying toward your student loans!
Budget for Your Student Loan Payment
If you haven’t been paying on your student loans since early 2020, now is the time to start getting your budget ready to handle that monthly payment again. That might mean you need to buckle down and stop the impulsive Amazon purchases, cut back on dining out and the luxury of having dinner delivered, or give up your 15 beloved television streaming services (yeah, those suckers add up real fast). There are plenty of ways to cut back and free up some extra cash in your budget—you just must take a good hard evaluation of your monthly spending and look for them.
Life Happens, Make Sure Your Information Is Correct
This feels like an odd step, but if you haven’t paid on your student loans in almost two years, you’d better make sure your loan servicer has your correct information. A lot can change in two years! Did you get married? Change your last name? Move to a new place? It’s a good idea to double-check that your loan servicer has all your correct info on hand before that first payment is due.
According to NerdWallet, about 42.9 million Americans have federal student loans according to the most recent data from the U.S. Department of Education. This means that 1 in every 8 people carry student loan debt. If you are one of those Americans who will be adding that extra payment back into your life, get ahead of it now and prepare! If you are looking for a new and improved budgeting and lifestyle system, check out our other blogs and that provide great methods and tips. Our website also provides you with a student loan payoff calculator to help payoff your debt quickly. Armed with a dedicated plan, you’ve got this!
