Student loan repayments set to resume – unless forbearance continues

Select’s editorial team works independently to review financial products and write articles that we think our readers will find useful. We earn commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

In two weeks from today, the federal student loan repayment moratorium is due to expire. This means that federal student loan borrowers will have to repay their debt again after a long hiatus that began at the start of the Covid-19 pandemic in March 2020.

The latest extension of the moratorium was signed on April 6 by President Biden, setting an end date of August 31, however, the administration remained vague about whether the repayment pause will be extended further.

Below, Select examines why the student loan moratorium may continue and what student borrowers should keep in mind going forward.

Subscribe to the Select newsletter!

Our top picks delivered to your inbox. Shopping recommendations that help you improve your life, delivered weekly. Register here.

Will student loan forbearance continue?

After nearly two and a half years of student loan forbearance, there’s a good chance President Joe Biden will extend the deadline beyond August 31, says Tara Miller, student loan consultant at GradFin.

“I think they’ll announce another extension, probably next week,” Miller told Select. His rationale is based on reports that loan servicers have been told not to contact borrowers about repayment, even though the deadline is fast approaching.

The Biden administration has provided no meaningful or concrete response regarding the possibility of further extensions. The president said at a press conference on April 28 that he would have an answer regarding student loans “in the coming weeks.” Fast forward to mid-August, and there has still been no substantial announcement from the White House or the Department of Education on this.

During an appearance on CBS News on Tuesday, U.S. Secretary of Education Miguel Cardona said his department speaks to the White House daily about the reimbursement pause, but could not provide a details. Select has also contacted the US Department of Education but has yet to receive a response.

However, in the student loan Facebook group “Surviving Student Debt“, some borrowers have reported that their service agents say they will owe their next payment in the coming weeks. Part of that could be because issuers have programmed their borrower profiles to build on the White House’s current mandate — rather than speculation that the repayment pause won’t be extended.

How to manage future student loan repayments

If the predictions are correct and student loan forbearance actually continues, Miller encourages borrowers to be proactive about their loans, even if no payments are required. At the very least, she says, they should know who their servicing agent is and make sure their contact information is up-to-date so they’re notified of any changes to student loan repayment or forbearance.

Miller also advises looking at student loan forgiveness programs such as Public student loan forgiveness or any other government-funded program that may be available to you.

If your student loans remain outstanding without interest, it may be best to keep them where they are. Otherwise, when paying them back, consider refinancing to get a better interest rate or repayment plan. Note, however, that if you choose to go the refinance route, you will forfeit all federal government protections, including any opportunity for student loan forgiveness.

Here’s a look at some of Select’s favorite student loan refinance services:

SoFi Student Loan Refinance

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency loans

  • Types of loan

  • Variable rates (APR)

    From 2.24% (rates include 0.25% autopay discount)

  • Fixed rates (APR)

    From 3.99% (rates include 0.25% autopay discount)

  • Loan conditions

  • Loan amounts

    From $5,000; more than $10,000 for residential medical/dental loans

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

Student Loan Financing Student Loan Refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, Private, Graduate and Undergraduate Loans, Parent PLUS Loans

  • Types of loan

  • Variable rates (APR)

    From 1.86% (rates include automatic payment discount)

  • Fixed rates (APR)

    From 3.99% (rates include automatic payment discount)

  • Loan conditions

    From 5 to 20 years for the refinancing of student loans; 5, 7 or 10 years for the refinancing of the parental loan

  • Loan amounts

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

Laurel Road Student Loan Refinance

At the Laurel Road secure site

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency/scholarship loans, as well as special prices and reduced rates for healthcare professionals (doctors, dentists, optometrists and medical assistants)

  • Types of loan

  • Variable rates (APR)

    Starting at 2.50% (rate includes 0.25% autopay discount and does not assume any Laurel Road Checking related discount)

  • Fixed rates (APR)

    Starting at 3.99% (rate includes 0.25% autopay discount and does not assume any Laurel Road Checking discount)

  • Loan conditions

    5, 7, 10, 15, 20 years (but also offers any term less than 20 years, subject to underwriting criteria)

  • Loan amounts

    For bachelor’s degrees and above, minimum $5,000; for eligible associate’s degrees in healthcare, up to $50,000 in loans for non-ParentPlus refinance loans

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

Serious student loan refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

    Federal, Private, Graduate, and Undergraduate Loans

  • Types of loan

  • Variable rates (APR)

    From 1.89% (rates include 0.25% autopay discount)

  • Fixed rates (APR)

    From 3.49% (rates include a 0.25% automatic payment discount)

  • Loan conditions

    Flexible terms between 5 and 20 years

  • Loan amounts

    A minimum of $5,000, up to $500,000 (California residents must apply for a refinance of $10,000 or more)

  • Minimum credit score

  • Minimum income

  • Authorize a co-signer

At the end of the line

The future is still uncertain for those with federal student loans. From the possibility of loan forgiveness to the worries of millions of borrowers who may soon have to start making their monthly payments again, the federal government certainly isn’t spelling it out.

Miller says borrowers should prepare for the resumption of payments, rather than having to rely on government-mandated forgiveness. “Borrowers should make plans to repay their loans regardless of forgiveness until an official announcement has been made,” she recommends.

Whatever happens, it is important to assess your current situation your financial goals and situation to determine the next steps you can take with your student loans. Consider refinancing if you have private student loans or putting money aside in a high-yield savings account that you can use for repayments if they start up again.

Check out Select’s in-depth coverage at personal finance, technology and tools, The well-being and more, and follow us on Facebook, instagram and Twitter to stay up to date.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.



Source link