Student loan moratorium ends October 1. What you need to know.
PEORIA (25News Now) - Three years ago, federal student loan payments were put on pause as millions were dealing with the effects of the pandemic. Now in a little over a week, that freeze will end.
For the millions of students who graduated during and after the pandemic, this will be the first time they will begin paying back their loans.
25News spoke with a student loan financial expert who breaks down what you need to know before the deadline approaches on October 1.
In total there is $1.6 trillion of federal student loan debt, impacting some 43 million Americans.
The clock is counting down to October, but interest rates already started accruing and returned back to the same rate it was prior to March 2020.
You may have already received your loan bill. It will list your individual due date and will be sent out with a 21-day notice.
Many will see their payments at the same amount as before the freeze began.
You may also have a new loan servicer.
Two of the bigger companies: FedLoan and Navient are no longer in contracts with the Department of Education.
The Biden Administration already forgave $116 billion in student loans and canceled close to $40 billion in federal student loans for 800,000 people.
As Jack Wallace, the government and relations director, for private student loan lending company, Yrefy, explains, there are income-driven repayment and graduated repayment plans available.
“Be prepared. Be proactive. Be patient. While you’re on www.StudentAid.Gov go and look at the contingent repayment programs that are on there and use the calculator to see which programs are best for you.” said Wallace.
When it comes to being proactive, Wallace suggests when you hop on studentaid.gov, enter your current income and see if there is a way to lessen the amount you owe.
He tells us on average people in Illinois are going to pay about $200-400 a month, but ”there are a number of programs out there that will lower your monthly payment. Some can get as low as $0 and it’s important to know that.”
As a reminder, the Free Application for Federal Student Aid also known as FAFSA will not be available in October like normal.
Instead, the application will not open until sometime in December. No date has been formally announced yet.
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