Introduction
Hi readers,
The student loan moratorium has been a hot topic in recent months.
Millions of Americans have been taking advantage of the opportunity to pause their federal student loan payments and interest accrual.
With the moratorium set to expire on August 31, 2023, many borrowers are wondering what will happen next. In this article, we’ll provide an update on the latest news about the student loan moratorium and discuss what options are available to borrowers when the moratorium ends.
Reasons for the Student Loans Moratorium
The student loan moratorium was first put in place in March 2020 in response to the COVID-19 pandemic. At the time, the economy was in a state of freefall, and millions of Americans were losing their jobs. The moratorium was designed to provide relief to borrowers who were struggling to make their student loan payments.
The moratorium has been extended several times since it was first put in place. The most recent extension was announced in April 2023, and it will keep the moratorium in place until August 31, 2023.
What Happens When the Moratorium Ends?
When the moratorium ends, borrowers will have to start making payments on their student loans again. However, there are a number of options available to borrowers who are struggling to repay their loans.
These options include:
1. Income-driven repayment plans
Income-driven repayment plans cap your monthly student loan payments at a percentage of your income. This can make your loans more affordable if you have a low income.
2. Loan forgiveness
There are a number of loan forgiveness programs available to borrowers who work in certain public service jobs. These programs can forgive your loans after a certain number of years of service.
3. Consolidation
Loan consolidation allows you to combine multiple student loans into a single loan with a lower interest rate. This can make your loans more manageable and reduce your monthly payments.
Should You Refinance Your Student Loans During the Moratorium?
With interest rates rising, you may be considering refinancing your student loans to get a lower interest rate. However, it’s important to weigh the pros and cons of refinancing before you make a decision.
Pros of refinancing:
- Lower interest rate
- Lower monthly payments
- Shorter loan term
Cons of refinancing:
- You may lose access to federal loan forgiveness programs
- You may have to pay a refinancing fee
- Your new loan may have a higher interest rate than your current loans
What If I Can’t Afford My Student Loans?
If you can’t afford your student loans, don’t panic. There are a number of resources available to help you. You can contact your loan servicer to discuss your options, or you can speak to a non-profit credit counseling agency.
Other Articles You May Be Interested In
- How to Get Student Loans Forgiven
- The Best Student Loan Repayment Plans
- How to Consolidate Your Student Loans
Conclusion
The student loan moratorium has been a lifesaver for millions of Americans. However, the moratorium is set to expire on August 31, 2023. If you’re struggling to repay your student loans, there are a number of options available to help you.
FAQ about Student Loan Pause
Will the student loan pause be extended again?
No, the student loan pause is scheduled to end on December 31, 2022.
When will student loan payments restart?
Student loan payments will restart on January 1, 2023.
Do I need to do anything to restart my payments?
If you were making payments before the pause, your payments will resume automatically. If you were not making payments, you may need to contact your loan servicer.
What if I can’t afford to restart my payments?
You may be eligible for income-driven repayment plans, which can lower your monthly payments. You can also apply for loan forgiveness programs.
What if I have federal student loans and private student loans?
The pause only applies to federal student loans. Private student loans are not paused.
What should I do to prepare for the restart of payments?
- Create a budget: Make sure you can afford your payments.
- Contact your loan servicer: If you have any questions or concerns.
- Explore repayment options: Consider income-driven repayment plans or loan forgiveness programs.
What if I’m in default on my student loans?
You should contact your loan servicer to discuss your options. You may be able to rehabilitate your loans or consolidate them.
What if I have questions about my student loans?
You can contact your loan servicer or visit the Federal Student Aid website: https://studentaid.gov/
What if I need additional help?
You can contact the National Student Loan Data System (NSLDS): https://nslds.ed.gov/