Good news for student loan borrowers! The federal student loan forbearance, implemented in March 2020 as a pandemic relief measure and scheduled to end on May 1, was extended today for the sixth time. During this forbearance, now scheduled to end on August 31:
- Monthly loan payments are suspended on federally-held student loans;
- Interest accrual is suspended on federally-held student loans; and
- $0 monthly payments during the forbearance count towards the 120-payment count for qualifying borrowers working towards Public Service Loan Forgiveness.
Also announced was a “fresh start” for student loan borrowers in default. Defaulted student loans will be automatically rehabilitated so that all borrowers re-enter repayment in good standing.
While you may be tempted to use this new reprieve to forget about your college loans for another four months, we would encourage borrowers to take this time to actively prepare for re-entering repayment.
Get your finances in order, reach out to your
loan servicer to understand your repayment options, and start setting aside your anticipated student loan payment in a savings account. This voluntary monthly savings will help your budget adjust to eventual required monthly student loan payments, and, as the forbearance winds down, the balance saved can be used as a lump sum payment to eliminate a portion of your student loan debt before it begins accruing interest again.
Learn more about preparing for repayment in our previous blog post,
Make the Most of the Student Loan Pause, and be sure to both enjoy and make use of this temporary reprieve.
