On January 20, 2021, the 0% student loan interest rate and suspension of payments on federal student loans owned by the Department of Education (ED) were extended through at least Sept. 30, 2021. These relief measures began on March 13, 2020, and below you’ll find a recap of the resulting repayment flexibilities for student loan borrowers and relevant considerations. Here are the five things you need to know about the repayment of your student loans.

Please check out http://StudentAid.gov/coronavirus for the latest updates.

1. Your Monthly Payments Are Suspended for ED-Owned Loans

The US Department of Education placed your ED-owned student loans in a temporary payment suspension that started March 13, 2020. So, you don’t have to make monthly payments during this time. If you made a payment during this time, you could request a refund through your loan servicer.

Federal loan servicers were directed to report monthly payments of $0 to all credit reporting agencies. If you decided to continue making monthly payments, any late payments you made would not be reported to your loan provider during the payment suspension period.

2.Temporary 0% Interest Rate on Loans Owned by the US Department of Education

All borrowers with federal student loans owned by the U.S. Department of Education (ED) will automatically have their interest rates set at 0% from March 12, 2020, until the COVID emergency relief period ends.

Since the interest rate on ED-owned student loans is automatically set at 0%, that means your student loans will not accumulate interest during this time.

If you are able, continuing to make manual payments on the loan servicer’s website has some benefits. Two of the benefits you will enjoy are that you will pay off your loan sooner and lower your loan’s total cost over time.

3.Your Income-Driven Repayment Recertification Date (IDR) Has Changed

Your IDR recertification date has been changed from your original recertification date as part of the payment suspension program. You will be notified by your loan servicer when it is time to recertify.

If you were paying your student loans using automatic debit earlier this year, your automatic payments would resume after the COVID-19 emergency relief measures end. If you’d like to make a change to your payment method, you must contact your loan servicer online or by phone.

If you’re unsure about your monthly payment amount, contact your loan servicer to confirm your future payment amount. This information may be available to you online by logging in to your loan servicer’s website.

4.Avoid Coronavirus-Related Scams!

There is no fee for this payment suspension or 0% interest period—not from the federal government and not from your loan servicer. If someone asks for money for either of those reasons, it’s a scam. Your loan servicer provides free help with your questions or concerns about your loan payments. There is no coronavirus-related loan forgiveness for federal student loans. Learn about avoiding student aid scams.

5. If You’re Struggling Financially, You Have Multiple Payment Options When Payments Resume

If you are worried you won’t be able to make your next payment after the payment suspension ends, you have options.

ED offers a variety of income-driven repayment (IDR) plans based on your income. Under an IDR plan, payments may be as low as $0 per month.

Check out StudentAid.gov’s Loan Simulator to learn how switching your repayment plan could impact your monthly payment amount before your next bill.

###Larry Marvin

LifeCrafter Foundation

Money $ense

Source:  U.S. Department of Education