Student Loan Payments With No Interest

I’ve been getting asked frequently if you should still pay your student loan payments right now while there is no interest. That’s a great question. Watch my latest YouTube video for my suggestions.

Click to watch on my YouTube channel.

Due to COVID-19, federal student loan payments were paused and they set interest rates to 0% for eligible federal student loans on March 13, 2020.

On December 22, 2021, The U.S. Department of Education extended the student loan payment pause through May 1, 2022.
On April 06, 2022, the U.S Department of Education extended the pause on federal student loans, interest, and collections through August 31, 2022.
The Department of Education is calling it a “fresh start” for many individuals by eliminating the impact of delinquency and default and allowing individuals to reenter repayment in good standing.

What that means to you is that if you have a federal student loan, you will not be penalized for not making a payment through this timeframe.

If you choose to make payments through this time, the amount goes straight to the principal balance.

Many people are choosing to not pay their student loans. If you are choosing that route, make sure you have a game plan for the amount that you normally would use for that payment.

Some suggestions:
1. Build or increase your emergency fund.
2. Pay off a debt.
3. Invest in training to increase your value and earning potential.

How to prepare after the payment pause:
1. Expect to receive a letter or go online about your statement 21 days before payments restart.
2. Enroll in autopay. You will get a .25 percentage point reduction in your interest rate.  If you are already enrolled in autopay, make sure to opt-in because some payments may not automatically restart.
3. Develop a game plan. Ask yourself a few questions.
When would you like to pay your student loans off? Do you need to be in an income-based repayment or can you pay the recommended amount.
FYI: When you are in an income-based repayment it will take you longer to pay your student loan off.
For some being in an income-based method is best for them because they can’t afford the high student loan compared to their other debts.
As you review your budget regularly you can make needed adjustments and reach your financial goals.

You can also go to studentaid.gov and stay up to date with information regarding your student loans. 

If you have questions on the best ways to save, budget, and invest, be sure to subscribe to my YouTube channel or sign up to get emails HERE when new blogs are posted.