The student loan freeze is coming to an end, and interest is about to kick in soon. And this time, student loan payment pause extensions are off the table.
Since payments haven't been much of a concern for federal student loan borrowers since March 2020, it can be daunting trying to figure out the timeline of when payments start and what you need to do now. Here are a few dates to keep in mind.
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The first date to consider
The federal student loan freeze will finally come to an end on Aug. 30. Borrowers haven't had to worry about student loans for over three years, so this could be a financial shock for millions of people.
There's no significant event that happens on Aug. 30, but it's good to put it on your calendar if you're trying to plan ahead. Here are some items you can add to your checklist before that date:
- Update your contact information on StudentAid.gov.
- Ensure your correct information is shown on your loan servicer's website.
- Start socking money away from your paycheck to pay down debt.
- Find out when your first payment will be due.
- Explore your repayment plan options.
Get ready for interest to resume
As soon as Sept. 1 rolls around the corner, the interest on your student loans will start accruing. When this happens, the amount of money you owe on your student loans will increase over time.
The thought of federal student loan interest may be new to you if you graduated within the last three years. Back in March 2020, the government gave borrowers temporary relief from interest in response to the COVID-19 emergency. That brought some student loan interest rates down to 0%. There were more than a handful of loans eligible for the 0% interest period, including:
- Defaulted direct loans
- Non-defaulted direct loans
- Defaulted Federal Perkins Loans owned by the Department of Education
If you're unsure if your loans were eligible or not, contact your loan servicer or log into your student loan account. However, if you qualify, the 0% interest rate on your loans held by the Department of Education should have been 0% during the payment pause, even while you were in school.
Payments will be due in October
The word has spread that payments will be due starting in October, but you'll have to connect with your loan servicer to get the exact details. In the upcoming weeks, you should receive a notification prior to your due date, providing you with all the necessary information.
If you're like the average student loan borrower, you might have to squeeze in approximately $337 worth of monthly payments into your budget soon. Now is a good time to revamp your budget to ensure you aren't scrambling later trying to pay your first student loan bill.
Countdown to student loan repayment
If you've been avoiding the return of student loan repayments, it's time to get organized and start planning now. Take note of all the upcoming dates so you can start saving for your first payment. The sooner you get moving on your student loan debt, the faster you'll be able to crush other financial goals.
