fbpx
Students

Here’s How To Prepare for August

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

Student loan borrowers have a bit longer to put off repayment as President Biden on Wednesday pushed back the federal student loan moratorium until Aug. 31. This extension means over 43 million Americans can put off repaying their federal student loans even longer without accruing any additional interest.

This was surprising to some as the United States continues to ease pandemic-related restrictions along with many Americans returning to work. But for those grappling with the economic repercussions of the pandemic as well as record-high inflation, it gives a bit of breathing room for the moment.

But with less than 150 days until the next deadline, consumers shouldn’t get too comfortable as payments will eventually resume.

Select details what steps consumers should take amid the extension, and how consumers should prepare to eventually repay their debts in the meantime.

Subscribe to the Select Newsletter!

Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here.

Student loan repayment frozen, but not far away

The extensions in the student loan moratorium have been quite helpful for the 43 million Americans who owe the federal government a collective $ 1.6 trillion. The newest extension is a relief but borrowers shouldn’t rely upon more extensions – instead they should start preparing to begin repayment.

Andrew Pentisa student loan expert tells Select borrowers should “start planning for August, September and beyond, don’t wait. This way, when payments resume, you will already have a plan in place to ensure that you avoid late or missed payments and are working strategically toward ending your debt. “

Pentis also says there are several steps borrowers should take to ensure their eligibility for the student loan moratorium, as well as preparing for the payment freeze to eventually end.

What you should do between now and Aug. 31

Pentis recommends first to “contact your federal loan servicer to confirm your ongoing eligibility for the pause and discuss options for handling repayment once the moratorium ends. If your servicer is not especially helpful, take on the research yourself or work with a certified student loan or credit counselor at an accredited nonprofit counseling agency. “

If you decide to work with a student loan counselor or agency, it’s important to ensure they’re fully certified as there are many student loan forgiveness scams.

After this, he urges borrowers to “get your financial house in order.” This includes prioritizing things like filling your emergency fund in a high-yield savings account like Ally Online Savings Account.

Ally Bank Online Savings Account

Ally Bank is a Member FDIC.

  • Annual Percentage Yield (APY)

  • Minimum balance

  • Monthly fee

    No monthly maintenance fee

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle * The 6 / statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee

  • Overdraft fees

  • Offer checking account?

  • Offer ATM card?

    Yes, if you have an Ally checking account

You’ll also want to educate yourself on all your repayment options, improving your credit score, monitoring your credit score and paying down any other high interest debt. Consider a free credit monitoring service, like from Experian, to keep tabs on what debts you owe and how they’re affecting your credit score. Some may even consider investing over paying back their student loans while interest is not accruing.

For the time being while payments aren’t required and interest isn’t accruing, Pentis stated that for those in a financially solid position, “it could make sense to get aggressive with extra payments or even consider student loan refinancing to score a lower APR . ” If you pay more towards your student loan balance now while interest isn’t accruing you should be able to save more in the long term: when the moratorium ends the interest is accruing will be on a smaller principle balance, meaning less interest charges overall.

If you’re considering refinancing your federal student loans it may be best to wait until the moratorium is over. If you were to refinance your federal student loans they would become serviced by a private lender, and while you may receive a lower interest rate, these private student loans do not qualify for the moratorium. If paying down your debt or refinancing are not possibilities, an income-driven repayment plan or pursuing student loan forgiveness could be worth it.

However if you already do private student loans then refinancing may be a good option, as it can save you thousands of dollars in interest charges. Select ranked SoFi Student Loan Refinancing as the best overall student loan refinancing company for its lack of application and origination fees and other benefits.

SoFi Student Loan Refinancing

  • Cost

    No origination fees to refinance

  • Eligible loans

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

  • Loan types

  • Variable rates (APR)

    From 2.24%; from 2.37% for medical / dental residents (rates include a 0.25% autopay discount)

  • Fixed rates (APR)

    From 2.99%; from 3.12% for medical / dental residents (rates include a 0.25% autopay discount)

  • Loan terms

  • Loan amounts

    From $ 5,000; over $ 10,000 for medical / dental residency loans

  • Minimum credit score

  • Minimum income

  • Allow for a co-signer

Bottom line

Editorial Note: Opinions, analyzes, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button
KQ Education Group