When Does Student Loan Payments Resume After COVID-19?
- The CARES Act
- When Do Student Loan Payments Resume After COVID-19?
- How to Prepare for Your Student Loan Payments
Many students are wondering when their student loan payments will resume after the COVID-19 pandemic. According to the Department of Education, most federal student loan payments will resume on October 1, 2020.
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The CARES Act
The CARES Act has put a pause on student loan payments through September 30th, 2020. If you have a federally held student loan, your payments are automatically paused and you do not need to take any action. Your loans will continue to accrue interest during the paused period.
What is the CARES Act?
The CARES Act is a $2 trillion stimulus package that was passed by Congress in March 2020 in response to the COVID-19 pandemic. The act includes provisions to provide relief for student loan borrowers, including a six-month pause on all federal student loan payments and interest accrual.
The CARES Act also provides temporary protections for borrowers who are experiencing financial hardship due to the pandemic. These protections include forbearance of up to 12 months on federally held student loans, and the option to request a deferment of principal and interest payments on other types of student loans.
For borrowers with private student loans, the CARES Act provides some limited protections, but these vary depending on the lender. Some private lenders have voluntarily agreed to implementing similar relief measures as those outlined in the CARES Act, while others have not.
The six-month pause on federal student loan payments is set to expire on September 30, 2020. At this time, it is unclear what will happen with regard to student loan relief after that date. However, it is possible that Congress will take action to extend the relief measures put in place by the CARES Act, or provide additional relief for borrowers.
What does the CARES Act do?
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by Congress and signed into law on March 27th, 2020. The CARES Act is designed to provide emergency financial assistance to individuals, families, and businesses affected by the coronavirus pandemic.
One provision of the CARES Act suspends all federal student loan payments until September 30th, 2020. This includes both principal and interest payments. Additionally, any loans that are currently in deferment or forbearance will automatically be placed into a temporary administrative forbearance until September 30th, 2020. This means that you will not have to make any student loan payments until at least October 1st, 2020.
If you have a Direct Loan or a Federal Family Education Loan (FFEL), you can choose to make no payments until September 30th, 2020, or you can choose to continue making payments if you want to. If you have a Perkins Loan, your payments will be suspended automatically until September 30th, 2020.
The CARES Act also provides that no interest will accrue on your federal student loans during this time period. This includes all Direct Loans, FFEL Loans, and Perkins Loans.
When Do Student Loan Payments Resume After COVID-19?
The CARES Act has put a pause on student loan payments through September 30th, 2020. This means that if you have a federal student loan, you won’t have to make any payments until October 1st, 2020. Depending on your loan servicer, you may have the option to suspend your payments until September 30th or make interest-only payments.
What is the date that student loan payments resume after COVID-19?
Although the CARES Act has suspended payments on federally held student loans until September 30, 2020, there is no need to wait until the last minute to resume making payments. You can resume payments at any time, and doing so may save you money in interest charges.
If you have private student loans, check with your servicer to see if they are offering any type of forbearance or deferment. Some private lenders are offering suspensions of payments for up to six months.
What are the options for students who can’t make their payments?
There are several options available for students who are unable to make their student loan payments due to the COVID-19 pandemic. The first option is to defer your payments. This means that you will not have to make any payments on your loans for a period of time, and the interest on your loans will be temporarily paused. You can typically defer your loan payments for up to six months.
If you are still unable to make your payments after the six-month deferment period, you may be eligible for an extended repayment plan. With an extended repayment plan, you will have longer to repay your loans, and your monthly payments will be lower. You may also be eligible for a hardship forbearance, which will allow you to temporarily stop making payments on your loans or reduce your monthly payment amount.
If you are struggling to make your student loan payments, contact your loan servicer as soon as possible to discuss your options.
How to Prepare for Your Student Loan Payments
If you have federal student loans, your payments are suspended until further notice due to the coronavirus pandemic. This means you don’t have to make any payments on your loans until further notice. This relief is automatic, and you don’t need to do anything to request it. If you have private student loans, your lender may be offering relief options, but you’ll need to contact your lender directly to find out what’s available.
What are some tips for preparing for your student loan payments?
The first step in preparing for your student loan payments is to know when they will resume. Payments on federal student loans were suspended through September 30, 2020, as a result of the coronavirus pandemic. If you have a private student loan, your lender may have also offered payment forbearance or deferment.
Now that the payment suspension has ended, it’s time to start planning for your student loan payments. Here are some tips to help you get started:
1. Know Your Student Loan repayment Options
There are several different repayment plans available for federal student loans, and each one has its own benefits and drawbacks. If you’re not sure which repayment plan is right for you, use the Department of Education’s Repayment Estimator tool to compare your options and estimate your monthly payments.
2. Make a Budget
Once you know how much your monthly student loan payment will be, it’s time to start budgeting for it. Make sure to factor in other expenses like rent, food, transportation, and utilities so that you can make your student loan payment without straining your finances.
3. Consider Refinancing Your Student Loans
If you’re struggling to make your monthly student loan payments, refinancing could be a good option. When you refinance your loans, you’ll take out a new loan with a lower interest rate, which could save you money over the life of the loan. Just be sure to compare rates from multiple lenders before choosing one.
What are some resources for budgeting and managing your student loan payments?
The first step in creating a budget is knowing how much money you have coming in and going out each month. This will give you a better idea of where you can cut back and where you may need to make some adjustments.
There are a couple of different ways to get this information:
-Look at your bank statements from the past few months to see what your average spending is.
-Create a spending diary for a month and track every penny you spend. This can be done with a simple notebook or using an app like Mint or You Need A Budget (YNAB).
-Once you have an idea of your average monthly income and expenses, you can start working on a budget that works for you.
There are a number of different budgeting methods out there, but one of the simplest is the 50/30/20 rule. This method suggests that you break down your after-tax income like this:
-50% goes towards essential expenses like housing, food, transportation, and utilities
-30% goes towards discretionary spending like entertainment, eating out, shopping, etc.
-20% goes towards savings and debt repayment
If your student loan payments are eating up too much of your budget, there are a few things you can do to free up some cash each month. Here are a few suggestions:
-Cut back on discretionary spending – this is the easiest place to start when trying to save money. Take a close look at your spending in the past month and see where you can cut back or eliminate entirely. For example, if you’re eating out several times per week, try cutting back to once per week or less. Or if you have a gym membership that you never use, cancel it. Small changes can make a big difference in your monthly budget.
-Look for ways to increase your income – if cutting back on spending isn’t enough to free up some extra cash each month, consider ways to increase your income. If you’re employed, ask your boss for a raise or look into picking up some overtime hours. If you’re not employed, now might be the time to pick up some part-time work or start freelancing in your spare time. Any extra money you can bring in will help reduce the amount of money going towards your student loan payments each month.
-Refinance your student loans – if you have private student loans, one option to consider is refinancing them at a lower interest rate. This could help reduce your monthly payments and free up some extra cash each month. There are also programs available through the government that offer student loan forbearance or deferment if you’re facing financial hardship due to COVID-19. Be sure to research all of your options before making any decisions about refinancing or deferment/forbearance as there may be consequences down the road if these options aren’t right for you