Federal student loans are abstained until September 30, 2021, and unless President Joe Biden’s administration takes further action, millions of borrowers will have to resume their payments on October 1. But the vast majority of college graduates are not ready to resume federal student loan payments, says one survey of over 23,000 student borrowers led by Student Debt Crisis, an advocacy group.
Senate Democrats have called on Biden to write off up to $ 50,000 in student loan debt per borrower by executive order, but Biden himself has questioned such robust student loan cancellation measures. Just over half of those polled (52%) are optimistic about their student loan situation with President Biden in power, according to the survey.
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Nine in 10 federal student loan borrowers won’t be ready to resume their payments on October 1, and about two-thirds (65%) won’t be ready until September 2022 or later. If you’re among the majority of borrowers who don’t know what to do with their student loans, read on to learn more about your options to make your payments easier to resume, such as income-based repayment plans, forbearance from economic hardship and student loan refinancing.
Private student loan rates are near all-time lows, which means now is a good time to refinance your private student loans if you are looking to save money. Visit Credible to compare the rates of several lenders and see if refinancing is right for you.
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What to do with your student loans before payments resume
No one knows if the student loan cancellation measures will be successful, and with student loan payments resuming in October, it’s time to start thinking about making payments again. In the meantime, borrowers have a few options to consider:
- Join an income-based repayment plan: Federal student loans offer an income-based repayment, which fixes your monthly payment based on your income. You can claim a refund based on income on the website of the Ministry of Education.
- Apply for abstention in the event of economic difficulties: Borrowers who are in financial difficulty can apply for a new student loan forbearance. The federal government offers two types of forbearance: postponement of economic difficulties and postponement of unemployment.
- Refinance your private student loans at a lower rate: The moratorium on student loan repayments only applies to federal student loans, but many borrowers also have private loans. Refinancing your private student loans can help you lower your monthly payments or pay off your debt faster.
If you are considering refinancing your private loans, be sure to compare the offers of several lenders on Credible to ensure you are getting the lowest possible rate for your situation. It will not impact your credit score.
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Student loan borrowers relied on federal forbearance moratorium
Given that 90% of student loan borrowers are not ready by the end of the student loan forbearance period, it’s no surprise that many of them were dependent on COVID-19 emergency relief. Three-quarters of survey respondents said the payment break was critical to their financial well-being.
“The pause in my student loan payments allowed me to catch up on my car payments, so it wasn’t picked up,” a respondent from New York said. “It allowed me to reduce my large balance on medical bills. It allayed my worries that I didn’t have enough money to meet my family’s basic needs.”
Student loan repayments are a big debt when trying to budget for living expenses. Almost a third of borrowers surveyed said more than 25% of their income would go to student loans if payments resumed.
If you have private student loans in addition to your federal student loans, there’s never been a better time to refinance. Borrowers who refinanced for a shorter loan term on Credible saved $ 17,344 over the life of their loans. Find out the interest rate on your private student loan and compare the rates in the table below to see if refinancing is right for you.
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