By Jorge Santiago
If you have federal student loans, you probably already know that emergency payment suspension has been extended to January 31, 2022.
Between recent student loan servicer shakeups, the Covid-19 surge, and 90 percent of affected borrowers saying they’re not prepared to resume payments, the decision to extend the payment freeze beyond September (as previously scheduled) comes as a relief for many borrowers.
But do you know how to use this additional extension to your advantage? Don’t just think of the extension as extra time without federal student loan payments — think of it as extra time to plan, to save, and to get ahead.
Here are some things you can do help put your best financial foot forward until federal student loan payments resume:
Get in touch with your student loan servicer
Contact your student loan servicer to confirm your payment due date, reconnect a payment method to auto-pay your bill, and learn about any new policy changes. If you’ve moved since March 2020, be sure to update your mailing address, too.
If your loans are serviced by FedLoan, Granite State, or Navient, be advised that these servicers have announced that they will transfer their student loans to other servicers before the end of the year. With that in mind, you may want to keep an extra watchful eye out for updates about the transfer in the event that you need to take any action with the new servicer.
Make sure you’re on the best path forward
Now is a great time to explore your eligibility for new federal repayment plans and forgiveness programs.
Switching to an income-driven repayment plan, for example, could lower your monthly payment and get you on track to have outstanding debt forgiven after a certain number of years. If you work for a non-profit, government, or public service organization, you may also qualify for Public Service Loan Forgiveness, which forgives remaining loans after ten years of qualifying payments.
Consider making payments
It may sound counterintuitive, but for some borrowers, the suspension period is the perfect time to make student loan payments.
That’s because the interest rate for federal student loans is still 0%, so any payments you make during the freeze will apply directly to your principal — which can ultimately lead to paying off your student debt sooner.
Get ahead on other financial goals
The average monthly student loan payment is $393 — a major expense that often forces borrowers to delay other financial goals until their student debt is paid off. For example, did you know that more than half of non-homeowner borrowers say their student debt has delayed their ability to buy a home?
Without the expense of monthly student loan bills, now could be the perfect time to get ahead on other priorities like saving up for a down payment, making extra retirement fund contributions, opening an emergency savings account, or setting aside cash for a major purchase.
Learn how The Milford Bank can help
When it comes to student debt, you don’t have to go it alone. The Milford Bank has partnered with Candid.ly, the leading student debt repayment platform, to give customers the tools they need to help make managing their student loans easier than ever before. Visit milfordbank.com/other-services/candidly/ to learn more and activate your free account today.