Federal student loans are currently in a nationwide period of forbearance. As part of this forbearance (which was included in the CARES Act, passed by Congress in March), all student loan borrowers with federally-backed loans had their payments paused and interest rates set to 0% until September 30, 2020. Collection activity for outstanding federal student loan debt also went on hold.
It’s been a much needed concession for families and individuals struggling to find their financial footing during the COVID-19 pandemic.
That concession may last a little longer, too. As part of a recently released executive order, these student loan benefits may be extended through the end of the year.
For some, this has been a great opportunity to make significant progress against their debts, thanks to the 0% interest rate. For others, it’s a chance to focus financial energies in more pressing directions.
Whether it comes on September 30, December 31, or some other time, however, eventually the forbearance period will end. If you haven’t yet, now’s the perfect time to start planning for what comes next.
Review your repayment plan options
One of the biggest benefits to financing your education through federally-backed student loans is all the repayment plan options available to you. If you were struggling to manage your payments before the forbearance kicked in, consider switching to an income-driven repayment plan. There are multiple options, so you’ll want to find the plan the best fits your circumstances.
Alternatively, there are extended plans that increase the length of the payment period in exchange for lower monthly payments. Just keep in mind that this may cost you more in the long run.
Consider student loan consolidation
If you’re juggling multiple loans with different rates (and different due dates), it may help to consolidate all your loans into a single Direct Consolidation loan. There are always risks with debt consolidation, however, so make sure you understand what you’re agreeing to and feel comfortable with the new arrangement.
If terms were favorable, you could also consolidate with a private loan. Keep in mind, however, that consolidating with a private loan would mean losing the option to use any of the repayment plans available for federal loans.
Connect with a student loan counselor
Finally, if you’re dreading the end of forbearance and need help figuring out your options, consider connecting with a trained student loan counselor. They can give you unbiased advice on how to manage both your student loans and your overall monthly finances.
No matter when the forbearance period ends, you’ve got a little time to put yourself in the best possible position to succeed. Make sure to act now so you’re not scrambling later.