Are you prepared for the end of student loan relief?
Welcome back to Coffee & Cash!
Today we are back talking on the topic of student loan repayment. For those of you with Federal student loans that have been enjoying the deferral period over these past many months, it looks like come May 2022, it is time to restart your payments.
Just in case you are not prepared, or maybe contemplating not participating, we wanted to review some important actions to consider
1. Not paying your student loans
If you’re thinking of protesting student loans by not paying them, don’t make that mistake. You will accrue late fees, your student loan balance will increase, and your credit score will drop for non-payment. Ultimately you will face loan delinquency or actual default. Student loans will follow you to the grave.
2. What student loan repayment plan should I take?
If you anticipate struggling to pay student loans when this repayment date arrives, you’re not alone. Many student loan borrowers have struggled financially due to the Covid-19 pandemic. You have several options, not only the usual deferment or forbearance, but also, an alternate option may be to enroll in an income-driven repayment plan. This type of repayment plan evaluates your monthly student loan payment relative to your discretionary income, family size, and state of residence, then calculates a rate repayment. Contact your student loan officer for more details and to see if you qualify.
3. Am I eligible for student loan forgiveness.
If you want student loan forgiveness, now is the time. This option may require some research, but is certainly worth the effort if you are deemed eligible. There are many ways to take advantage of student loan forgiveness. One such program is called the Public Service Loan Forgiveness program, which cancels student loans for borrowers who makes 120 monthly payments and work for a qualified public service or non-profit employer. Check this option out today!
4. What about loan refinance?
Just like a mortgage or car loan, just reducing the interest rate or changing the terms on your loan can make payments much more manageable. For example, let’s assume you have $100,000 of student loans with a 7% interest rate and 8-year remaining repayment term. If you refinance these student loans with a 3% interest rate and 10-year repayment term, then you would save $398 each month and $15,011 overall.
Remember, refinancing federal loans means taking a private loan. This could have other ramifications if you receive other types of benefits so talk to a specialist before you jump at this option.
Don’t get stuck making the wrong financial moves with your student loans. If you have any questions regarding making the right financial moves, please feel free to call our office or book a complimentary consultation right on our calendars through the link in the description.
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