Student loans: what to do to prepare in case repayments start in September?

FRESNO, Calif. (KFSN) — A pandemic-induced federal student loan repayment freeze is set to expire Aug. 31.

College graduates have not had to make federal student loan repayments for the past two years.

But reimbursement could resume in September.

President Biden may soon announce another freeze extension, but you can take steps to prepare in case that doesn’t happen.

Charlie Eaton, a sociology professor at UC Merced, expects the freeze to be prolonged.

“They have signaled that they want to cancel some of the student debt for most student borrowers before restarting payment. They are still working on this issue, so it seems entirely possible that they will delay the restart. reimbursement,” he said.

Eaton says 90% of student loan debt is federal and was administered by private loan servicers such as Navient, which transferred its loans to a company called Aidvantage.

He says now is a good time to consider how to handle your remaining loan debt if an extension is not granted.

“A very important tool that has been improved recently is what’s called income-based reimbursement and it’s a plan you can sign up for that can reduce your payments to zero, if you don’t have enough income to track your student loan payment.”

You can apply through the Ministry of Education website.

Teachers, nurses and other public employees can take advantage of a program that cancels your loan balance if you’ve made payments for 10 years.

If federal loan repayments were to resume in the near future, Eaton doesn’t think you should refinance this loan.

“If you refinance, you risk losing your eligibility for loan forgiveness under these loan forgiveness programs,” he says.

To access some resources to help you apply for federal loan forgiveness, click here and here.

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