Control Your Student Loan Debt: How to Make the Most of the Extended Payment Pause

President Joe Biden has once again extended pause on federal student loan payments and interestthis time until December 31, 2022. Payments will now resume on January 1, 2023, and Biden has indicated that there will be no further extension of the payment moratorium.

However, there are certain advantages to continuing to make payments during the break. To do this, you will need to set up repayment online or contact your federal student loan provider. It’s important to remember that during the payment break, the former student loan servicing giant Navient transferred all of its student loans to Aidvantage.

Whether you’re continuing to make student loan repayments during the freeze or starting over in the new year, there are plenty of ways to simplify the student loan repayment process, as well as save time and effort. money along the way. Here are five tips to make it easier to pay off your student loans and help you get out of debt faster.

To learn more about student loans, learn all about Biden’s student loan forgiveness plan and who received the additional $32 billion in student loan forgiveness during Biden’s tenure.

1. Refinance student loans to get lower interest rates

One of the best ways to maximize your student loan repayment is to refinance your private (and sometimes even federal) student loans. It can help you:

  • Lock in a lower interest rate
  • Consolidate your balances
  • Simplify reimbursement on one account
  • Adjust your monthly payment according to your budget

Refinancing is especially useful if your credit has improved since taking out the loan, and can also be used to release a co-signer from your student loan debt. However, no student loan refinancer is perfect for every borrower, so it is important to assess affordability, borrower eligibility criteria, and customer service when researching refinancers.

You can refinance all your loans or just select balances. It is important to note, however, that if you refinance federal student loan debt into a private refinanced loan, you may lose certain benefits, including forbearance or deferment, repayment contingent on income, and student loan forgiveness Opportunities.

2. Pay extra to eliminate your debt faster

Whether it’s an extra $20 per month or an extra payment per year, pay off your student loans faster than expected can help you save on interest and settle your debts faster. Whenever you have room in your budget, making extra payments can reduce your student loan balance — although you should always pay off higher-interest debts first, like credit cards and personal loans.

Most lenders will allow you to make capital-only contributions in addition to your scheduled monthly payment. The sooner you reduce your principal balance, the less interest you will pay over the life of the loan and the sooner you can completely eliminate the debt.

3. Sign up for an autopay program to “set it and forget it”

Setting up an automated payment system can simplify your monthly student loan payments. There’s less risk of making a late payment – ​​which could incur fees and hurt your credit score – and it’s one less thing to worry about.

Plus, it could also save you some money. Many lenders offer rebates in exchange for setting up automatic payments on your loan. These autopay rebates are typically around 0.25%, which can add up over time.

4. Consider income-contingent reimbursement (IDR) plans

Depending on the type of loan and what you can afford each month, you may want to consider the different repayment plan options available to you.

Some federal student loan borrowers may be eligible for income-contingent repayment (IDR) plans. There are four to choose from:

  • REIMBURSEMENT plan (revised according to your income)
  • PAYE plan (pay as you earn)
  • IBR (Income Based Reimbursement) Plan
  • ICR scheme (income contingent reimbursement)

While a standard repayment plan is often the best choice for paying off your loans as quickly as possible, these income-based options can help make monthly payments more affordable for borrowers who can only afford one more payment. small each month. Eligibility for IDR plans is based on family size and discretionary income (income after taxes and necessities such as housing, food, utilities, and transportation).

By enrolling in one of these programs now, before student loan payments become due again in January, you can ensure that you are able to afford your monthly student loan payment.

5. See if you qualify for additional student loan forgiveness

While Biden’s student loan debt forgiveness plan includes $10,000 to $20,000 for all borrowers earning less than $125,000 per yearthe Department of Education repaid $32 billion in student loans for public servants, people with disabilities and victims of college fraud since Biden took office in January 2021.

Usually, student loan forgiveness is available to federal borrowers who work as eligible public servants, such as teachers, government employees, and nonprofit workers. Other loan forgiveness may result from unique circumstances, such as the COVID-19 pandemic, or as a result of government policy, such as the $5.8 billion discharged for borrowers with permanent disabilities in August 2021.

Loans can also be canceled or canceled for other reasons; if your school closes before or shortly after you graduate, if you or a borrowing parent dies, or (in some cases) after declaring bankruptcy. Other borrowers can take advantage of established programs that can forgive, cancel or discharge their debt. It’s important to remember, of course, that you will still need to make one-time payments on the loan(s) until you qualify for a rebate.

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