Two weeks from today, the federal student loan repayment moratorium is scheduled to expire. That means federal student loan borrowers will once again have to make payments toward their debt after a long hiatus that began at the start of the Covid-19 pandemic in March 2020.
The most recent moratorium extension was signed on April 6 by President Biden, setting an end date of Aug. 31, however, the administration has been vague as to whether the repayment pause will be extended further.
Below, Select takes a look at why the student loan moratorium may continue, and what else student loan borrowers should keep in mind going forward.
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Will student loan forbearance continue?
After nearly two-and-a-half years of student loan forbearance there's a good chance President Joe Biden will extend the deadline beyond Aug. 31, says Tara Miller, a student loan consultant at GradFin.
"I do think that they will announce another extension, likely next week," Miller told Select. Her justification is based on reports that loan servicers were told to not reach out to borrowers regarding repayment, even as the deadline quickly approaches.
The Biden administration has not provided any significant or concrete answers regarding the possibility of further extensions. The president said in a press conference on Apr. 28 that he would have an answer regarding student loans "in the next couple of weeks." Fast forward to mid-August, and there still hasn't been a substantial announcement from the White House or the Department of Education regarding the matter.
On a CBS News appearance on Tuesday, United States Secretary of Education Miguel Cardona said his department was speaking to the White House daily about the repayment pause, but couldn't provide any specifics. Select also reached out to the U.S. Department of Education but has not yet received a response.
However, in the student loan Facebook group "Surviving Student Debt," some borrowers have reported that their servicers are stating that they will owe their next payment in the coming weeks. This could be in part because the issuers have programmed their borrower's profiles to rely on the current mandate from the White House — rather than speculation that the repayment pause won't be extended.
How to handle future student loan payments
If the predictions are correct and student loan forbearance does actually continue, Miller encourages borrowers to be proactive about their loans even if payments aren't required. At the very least, she says, they should know who their servicer is and make sure their contact information is up to date so they'll be notified of any changes regarding student loan repayment or forbearance.
Miller also advises looking into student loan forgiveness programs such as Public Student Loan Forgiveness or any other government-funded programs that may be at your disposal.
If your student loans remain in forbearance with no accruing interest, it may be best to keep them where they are. Otherwise, when it's time to pay them back, consider refinancing so you can secure a better interest rate or repayment plan. Note, however, that if you do choose to go the refinancing route, you'll waive all federal protections from the government, including any possibility for student loan forgiveness.
Here's a look at some of Select's favorite student loan refinancing servicers:
SoFi Student Loan Refinancing
Cost
No origination fees to refinance
Eligible loans
Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency loans
Loan types
Variable and fixed
Variable rates (APR)
6.24% - 9.99% (rates include a 0.25% autopay discount)
Fixed rates (APR)
5.24% - 9.99% (rates include a 0.25% autopay discount)
Loan terms
5, 7, 10, 15, 20 years
Loan amounts
From $5,000; over $10,000 for medical/dental residency loans
Minimum credit score
N/A
Minimum income
N/A
Allow for a co-signer
Yes
Terms apply.
Education Loan Finance Student Loan Refinancing
Cost
No origination fees to refinance
Eligible loans
Federal, private, graduate and undergraduate loans, Parent PLUS loans
Loan types
Variable and fixed
Variable rates (APR)
From 5.28%
Fixed rates (APR)
From 5.48%
Loan terms
From 5 to 20 years for student loan refinancing; 5, 7 or 10 years for parent loan refinancing
Loan amounts
From $10,000
Minimum credit score
N/A
Minimum income
N/A
Allow for a co-signer
Yes
Terms apply.
Laurel Road Student Loan Refinancing
Cost
No origination fees to refinance
Eligible loans
Federal, private, graduate and undergraduate loans, Parent PLUS loans, medical and dental residency/fellowship loans, plus special pricing and reduced rates for health-care professionals (physicians, dentists, optometrists and physician assistants)
Loan types
Variable and fixed
Variable rates (APR)
From 4.99%
Fixed rates (APR)
From 5.24%
Loan terms
5, 7, 10, 15, 20 years (but also offers any term below 20 years, subject to underwriting criteria)
Loan amounts
For bachelor's degrees and higher, minimum $5,000; for eligible associate degrees in the health-care field, up to $50,000 in loans for non-ParentPlus refinance loans
Minimum credit score
N/A
Minimum income
N/A
Allow for a co-signer
Yes
Terms apply.
Earnest Student Loan Refinancing
Cost
No origination fees to refinance
Eligible loans
Federal, private, graduate and undergraduate loans
Loan types
Variable and fixed
Variable rates (APR)
5.72% - 9.74% (rates include a 0.25% autopay discount)
Fixed rates (APR)
4.96% - 9.74% (rates include a 0.25% autopay discount)
Loan terms
Flexible terms anywhere between 5-20 years
Loan amounts
A minimum of $5,000, up to $500,000 (residents of California must request to refinance $10,000 or more)
Minimum credit score
650
Minimum income
No income requirement
Allow for a co-signer
No
Terms apply.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.96% APR to 9.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.72% APR to 9.74% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
Bottom line
The future is still uncertain for those with federal student loans. From the possibility of loan forgiveness to the worries of millions of borrowers who may soon have to resume making their monthly payments, the federal government certainly isn't making things clear.
Miller says borrowers should prepare themselves for payments to resume, rather than having to rely on government-enacted forgiveness. "Borrowers should make plans to pay off their loans without taking into account forgiveness until an official announcement has been made," she recommends.
Whatever happens, it's important to evaluate your current financial goals and situation to determine the next steps you're able to take with your student loans. Consider refinancing if you have private student loans or setting aside cash in a high-yield savings account that you can use toward repayments if they do restart.
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