President extends federal student loan borrowers’ interest-free payments through September 2021
As one of his first executive orders, President Biden extended the pause in place on federal student loan payments (and interest on those payments) from January 31, 2021 to September 30, 2021. As part of the original coronavirus relief bill (the CARES Act) the loan relief had already been extended twice. The executive order does not apply to private student loans.
If you are fortunate enough to be employed, you may decide to continue making payments to help lower your overall debt. Please know that any payments made until September 30 will go entirely toward the loan principal.
As an alternative, since you are not accruing interest on your student loan, consider paying off or reducing balances on any bills or loans that do accumulate interest. Lastly, you may want to consider creating and saving to an emergency fund for financial security.
If you are a recent graduate or taking time off from school, learn your responsibilities so you can avoid penalties assessed on missed payments or defaulting on your loan. If you are experiencing financial hardship, contact your loan provider to request an extension of payments or other relief. You may be able to enroll in an income-driven repayment plan, which will provide you with a strategy for loan repayment.
In response to the coronavirus pandemic, President Biden has proposed canceling certain student loans, including the forgiveness of $10k in federal student loans for all borrowers, regardless of their income. College graduates with federal student loan debt might want to take advantage of the pause on payments through September 30, 2021 to maximize any forgiveness that might apply to them. However, the President’s proposal is just a proposal at this time, and it is uncertain exactly what is going to happen with student loan forgiveness.
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