People with federal student loans may have some more time before they have to start making payments again. During the pandemic, the Trump administration suspended federal student loan payments for borrowers who requested it.
Earlier this month, President-elect Biden’s incoming administration said it would extend the payment pause beyond the end of the month – when it was set to expire.
Seth Frotman, executive director of the Student Borrower Protection Center explained it’s not yet clear how long that extension would last.
“There's still a lot of unanswered questions about for how long and is it going to cover more borrowers? Is it going to include folks who have been left out?” Frotman said. “Right where we are now is kind of stay tuned and let's try to get more details.”
An Education Department spokesperson tells NBC 5 Responds, “The Department cannot speak to the future administration’s policies. In the event that the forbearance is extended past Jan. 31, the U.S. Department of Education will provide additional details about any such extension as appropriate. The Department will continue to update StudentAid.gov/coronavirus with any new information.”
Is Borrower Forgiveness Likely?
Biden has indicated he supports forgiving outstanding federal student debt up to $10,000. But, it’s not yet clear how.
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His incoming administration has said he would call on Congress to take up the issue. With a slim Democratic majority in the U.S. Senate, it’s not a done deal.
“We really are recommending that people don't make waiting for loan forgiveness a huge part of their strategy,” said Anna Helhoski, senior writer and student loan expert at NerdWallet.com. “Right now is really an opportunity, since there is a federal student loan repayment pause, to make your own plan for repayment regardless of how forgiveness shakes out.”
Federal vs. Private Student Loans
The payment pause only applies to federal student loans. Most loans are federal, but some people may have private loans or, if they took out multiple loans, a combination of private and federal loans.
If you’re not sure, try checking studentaid.gov using your FSA ID.
You can also call the number on your bill to confirm if federal protections apply to your student loan debt.
What If I Have a Private Loan and Can’t Afford My Payments?
Frotman said some lenders are extending payment grace periods, but some aren’t.
“Unfortunately, we've seen a wide variety of assistance from student loan companies,” he said.
Frotman said continue to reach out and ask about a repayment plan. If the lender agrees to an alternative payment plan, get the agreement in writing and confirm how your payments will be reported to credit bureaus.
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