Make Ends Meet: Federal student loan deferment done soon
LOUISVILLE, Ky. (WAVE) - The CARES Act of 2020 was put into place to try and relieve some of the economic fallout brought on by a pandemic that ravaged the world in several ways.
Federal student loan forbearance was extended several times as the economy and those affected by coronavirus did their best to make ends meet. Soon, over 44 million Americans will begin to restart payment of their outstanding federal student loans.
Mary Jo Terry from Yrefy, a national specialty consumer finance lender, stressed the pause was a saving grace for many who found themselves trying to survive a financial fiasco due to the effects of coronavirus on society. Those monthly payments generally used to pay back the debt they owed for the education could be redirected to housing, food, or savings.
“It was bumped once and they’re saying it’s not going to get bumped again,” Terry exclaimed. “Borrowers really should prepare for the May 2022 date of the federal loans going back into repayment.”
The pandemic payment pause that began in March 2020 for federal student loans will end May 1, 2022. What’s going away is a suspension of loan payments, 0% interest rates and no-collection efforts on defaulted loans.
“In (Kentucky) alone, it’s about $19.5 billion, and on average, people have $33,000 in debt,” Terry proclaimed. “It’s usually the highest debt that they have next to the rent payment or a mortgage payment.”
The average debt per borrower in Kentucky is $33,023.
“The loan servicers are sending letters to their borrowers and they’re also doing outbound calls,” Terry shared.
The Federal Trade Commission said not only to be prepared for those payments beginning May 1, but also watch out for scams by phone calls, emails, and text.
“Do not give out your personal information over the phone to someone who wants you to pay,” Terry stressed. “Do not give out your bank account information.”
The safest and easiest way to prepare for your student loan payments and update your information is to contact your loan servicer online or by phone. People can also go to https://studentaid.gov/announcements-events/covid-19.
“That website is very easy to navigate, and it’s managed by the Department of Education,” Terry explained. “You can find out who your loan servicer is because those have changed over the last two years. It’s a great resource to update your information.”
Ready or not, May 1 is not far away, and that means you must be ready to make your loan payment. You can also talk to your loan servicer about other options that may be available if you are not able to pay at this time.
What you cannot do is ignore that repayment date when it comes.
“Procrastination is only going to get you in trouble,” Terry proclaimed.
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