Student loans will soon restart. Here’s how to prepare for the refund.

Here’s how to prepare for the restart of student loan repayments.

Here’s what you need to know.

Student loans

Here’s how to prepare for the end of student loan relief.

1. Refinance student loans

Refinancing a student loan is one of the smartest ways to get a lower interest rate, save money, and pay off student loan debt faster. Rates are at historic lows, with variable rates starting at 1.74% and fixed interest rates starting at 2.44%.

This student loan refinance calculator shows you how much you can save when you refinance student loans.

For example, suppose you have $100,000 in student loans at an interest rate of 8% and a repayment term of 10 years. If you refinance these student loans with an interest rate of 3% and a repayment term of 10 years, you could save $248 per month and $29,720 in total.

Student loan refinancing allows you to combine your current private and federal student loans into a new private loan with a lower interest rate. You can choose a fixed or variable interest rate as well as a student loan repayment term of 5 to 20 years. To be approved, you will need to be employed or have a signed job offer, a credit score of at least 650, a stable monthly income, and a low debt-to-income ratio. Refinance federal student loans if you don’t need income-contingent repayment or civil service loan forgiveness, for example. You can still refinance private loans since they don’t have these federal benefits. Above all, even if you have already refinanced, you can refinance again with a lower interest rate.

2. Get student loan forgiveness

President Joe Biden has forgiven $15 billion in student loans since becoming president. This includes student loan forgiveness for government officials, borrowers with total and permanent disabilities, and student borrowers who have been misled by their college or university through borrower defense to repayment. (Do you qualify for $5 billion in student loan forgiveness?). That said, if you’re looking for full-scale student loan forgiveness, you’re unlikely to find it. Biden has focused on targeted student loan forgiveness for certain types of student borrowers. However, it is still possible to qualify for all of these types of student loan forgiveness. (Here’s how to apply for limited student loan forgiveness). There is also federal student loan forgiveness through income-driven repayment plans after 20 or 25 years of monthly payments.

3. Update automatic payment and contact information

Now is the time to update your autopay and contact information. Automatic payment means that your student loan officer will automatically deduct your monthly student loan payments from your bank account. First, if you’re not signed up for autopay, be sure to sign up because you can save 0.25% on your interest rate with most lenders. Your bank account may have changed during the Covid-19 pandemic, so make sure your student loan officer has your latest information. (Will student loan repayments be postponed until 2023?). Second, update your contact information with your student loan officer and the US Department of Education through Federal Student Aid (FSA). The Education Department is contacting student borrowers to alert them to the restart of student loan repayments. This includes nearly 16 million student borrowers getting a new student loan servicer this year. Several major student loan servicers have announced that they will no longer service your student loans this year. Updating your contact information will help ensure a smooth transition to your new student loan manager. (If Biden cancels student loans, that will happen next).

4. Get a lower student loan payment

There are many ways to get a lower repayment for your student loans. (7 ways to get a lower student loan repayment). One strategy is to use an income-driven repayment plan, which can also lead to student loan forgiveness. With income-based reimbursement, your monthly payment is based on your discretionary income and family size – and can be as low as $0 depending on your financial situation. There are four main income-based reimbursement plans: Income-Based Reimbursement (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) or income contingent reimbursement (ICR). Find the best income-based repayment plan for you, especially if you’re struggling to repay your student loan. You can register with your student loan officer. If you have already registered, be sure to recertify your earnings now, as they may have changed during the Covid-19 pandemic. (Shock poll: student loans will be completely canceled before student loan payments restart in May).

Student loans: next steps

The most important thing you can do to prepare for the restart of student loan repayments is to prepare now. The Biden administration has made it clear that federal student loan repayments will resume starting May 1, 2022. While that may change, there is no indication that student loan repayments will be delayed for a sixth time. So get ready now and don’t wait until April for your student loan repayment game plan. Here are some popular ways to pay off student loans faster:

Student Loans: Related Reading

Here’s who won’t get student loan forgiveness

Will student loan repayments be postponed until 2023?

Are you eligible for $5 billion in student loan forgiveness?

If Biden cancels student loans, it will happen next

About Judith J. George

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