Tackle Student Debt with CARES

If you have student loan debt, you need to be aware that the CARES Act has been extended.

The CARES Act was passed by Congress in early 2020. It offered temporary payment suspension and a 0% interest rate on student loans. It also offered a hold on all collections and wage garnishments on defaulted loans. President Joe Biden has extended it until September 30, 2021.

What the Student Loan Payment Relief Extension Does

Reminder: this isn’t the same as student loan forgiveness, because you still have to pay off your loans. The basic idea of this extension is that student loan interest rates will stay at 0% and payments on all federally owned student loans will be paused through the end of September. It’s a good idea to look at the Federal Student Aid website to double check that your loans are among those that qualify:

– Direct Subsidized Loans
– Direct Unsubsidized Loans
– Direct PLUS Loans
– Direct Consolidation Loans
– Federal Perkins Loans (if they’re not owned by the college you went to)
– Federal Family Education (FFEL) Program Loans (if they’re not commercially owned)

How the Extension Affects Different Loan Situations

Default: If your loans were already in default, this extension will give you the chance to get caught up. You can do your best to make those late payments without having to make any new ones!

Public Service Loan Forgiveness: If you’re in the process of qualifying for this type of loan forgiveness, any payments you make during this time count toward your 120 payments needed.

Private Student Loans: If you have private student loans, this extension doesn’t apply to you since your loans didn’t come from the federal government. It’s still worth chatting with your lender about an extension or some other plan if your finances have taken a hit.

What You Can Do to Pay Off Your Loans

If your income is stable 
Keep crushing your monthly student loan payments. Pay more than the minimum payment if you can.

If you have an at-risk income 
Save up a $1,000 emergency fund and keep making the minimum payments on all your debts. If you’re in a really tight spot, pause your student loan payments during the extension period and save any extra money you have until you’re able to get a more solid income.

If you’ve lost income 
Try to stay calm. Make it your top priority to cover the Four Walls (food, utilities, shelter and transportation). Pick up whatever side jobs are available, sell what you can, and try not to lean on credit.

If you have more than one student loan 
Think about consolidating and refinancing—but only if you can refinance under a zero costfixed (and lower) interest rate loan with a repayment period that is the same as or shorter than the original. 

If you have questions or would like more information, see how we can help today!

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