By ANTHONY ONEAL
Guys, we all know 2020 was insane. But here’s some good news: you may not have to pay student loans until October of this year, as the student loan waiver under the CARES Act has been extended through September 30, 2021.1 Let’s talk about what this actually means so you know what’s happening, and so you can get that student loan out of your life for good.
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What did the CARES Act do?
The CARES Act (or Coronavirus Aid, Relief, and Economic Security Act) was a stimulus bill passed by Congress in the early days of the COVID-19 pandemic to help get the economy (and many Americans) going again.2 The CARES Act offered temporary suspension of payments, a 0% interest rate on student loans, and a stop to all collections and garnishments — or money taken from the borrower’s salary to repay the loan — on defaulting loans.3
When it expired, then-President Donald Trump extended the student loan exemption until January 31, 2021. But now that President Joe Biden is in office, he has extended it again until September 30, 2021.4 What does that mean for you and your loans?
What does the Student Finance Extension do?
Let’s clear something up first: This is not the same as a student loan forgiveness plan. You will still end up paying the full amount of your student loans unless a different policy or aid package is put in place.
The basic idea of this extension is that student loan interest rates will remain at 0% and payments on all federal student loans will be suspended until the end of September.5 These types of loans include:
●Direct subsidized loans.
●Direct unsubsidized loans.
●Instant PLUS Loans.
●Direct consolidation loans.
●Federal Perkins Loans (if not owned by the university you attended).
●Federal Family Education (FFEL) program loans (if not commercially owned)
And get this: If you have that kind of federal student loan, you’re already included — no need to sign up or fill out any paperwork.6 Nice! But it’s a good idea to look at the Federal Student Aid website to check if your loans are eligible.
How the renewal affects different loan situations
If your loan situation is different from the typical federal student loan repayment process, let’s take a look at how this renewal might affect you. Here are some possible scenarios:
Default: If your loans were in default (i.e. you didn’t pay on time) before COVID, this extension gives you a chance to be caught up. You can do your best to make those late payments without having to make new ones!
Forgiveness of Public Service Loans: If you qualify for this type of loan waiver and you can still work and make payments, know that any payments you make during this period will still count towards your 120 required payments.7 Take advantage of the 0% interest and keep paying off your loans.
Private student loans: If you have taken out private student loans, this extension does not apply to you as your loans did not come from the federal government. But it’s still worth talking to your lender and asking for an extension or some other kind of plan if your finances have taken a hit.
It is always a good idea to check with your lender to make sure you still meet all the requirements and see if there is anything else they can do to help you during this season.
What you can do to pay off your loans
Remember, the renewal will not get rid of your debt. It will only extend your repayment period and (hopefully) help you if you are struggling financially. Times are tough, but if you can put together a solid plan of action, you’ll get rid of those student loans faster than you might think.
Here are some practical steps you can take to pay off your loans based on your current financial situation:
If your income is stable, keep crushing your monthly student loans. If possible, pay more than the minimum amount! Or, if you use the debt snowball to pay off your debts from smallest to largest and you have smaller debts that you need to pay off before your student loan, you could use the money that you would have used on your loans to get rid of. your smaller debts faster during this time. Whatever you do, hold on to your guilt-attacking mentality!
If you have a risk incomeSave a $1,000 emergency fund ASAP and keep making the minimum payments on all your debts. If you’re really struggling, pause your student loan payments during the renewal period and save any extra money you have until you can get a more solid income.
If you lose income, try to keep calm, stop the snowball of your debts and make it your top priority to cover the four walls (food, utilities, shelter and transport). Take up all the side jobs that are available, sell what you can and save whatever money you have left until you’re back on your feet.
If you have more than one student loan, you might consider consolidating and refinancing them, but only if it doesn’t cost you anything to refinance can you get a lower fixed interest rate and not get a longer repayment period. This will leave you with more money to pay off your debts.
Let’s face it: this is a really weird time. But I know you can get through it and come out stronger on the other side. For more information on how this extension works (and how it can work for you), check out This article!
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Anthony ONeal is a national bestselling author, financial expert and host of the popular online series “The Table” on his YouTube channel. He has appeared in Good Morning America, The Tamron Hall Show, The Tom Joyner Show and Rachael Ray, among others. Anthony has been with Ramsey Solutions since 2015, teaching young adults how to budget, live debt-free, avoid student loans, and build real wealth for their future. Follow Anthony on Twitter, Instagram, Facebookand YouTubeor online at anthonyoneal.com.