Still Can’t Pay Your Student Loans? What to Do When the Forbearance Period Ends

Still Can't Pay Your Student Loans? What to Do When the Forbearance Period Ends

( – There’s been broad criticism of Congress’s failure to provide adequate support for those affected economically by the pandemic over the last eight months. Congressional Democrats, led by Speaker of the House Nancy Pelosi (CA), repeatedly refused to agree to a reasonably-priced relief package for unemployment benefits and small business grants.

Student Loan Forbearance

However, the government did manage to bring in some forms of financial aid. One important example is the student loan forbearance period, which Congress initially allowed through September 30. President Trump subsequently extended it to December 31.

Under the scheme, those with outstanding student debts have not had repayment obligations since March 13 of this year. Also, interest has not accrued on principal amounts since that date. As of next January, however, payments and interest accruals are set to resume as normal.

What to Do When Payments Return

For anyone whose financial situation has been compromised by the pandemic, this will not be welcome news. That said, there are steps you can take to make your return to a normal payment schedule less painful.

Firstly, get a plan in place now. Contact your loan provider to ascertain when exactly your next payment will be due, and start planning to have funds in place for that date.

Secondly, assess how much you actually owe. You may have made repayments after the initiation of the moratorium; if so, you could be able to write this money off against your first 2021 payments. Alternatively, you could choose to resume repayments in January and finish paying your loan early.

If you’ll be unable to resume payment as normal, don’t panic. You can apply for general forbearance, or work with your loan provider to come up with a tailored repayment plan.

Will There Be a Further Extension of the Forbearance?

Congress may decide to introduce another moratorium for early 2021. However, considering we don’t even know who will hold the balance of power in Congress yet, it would be unwise to rely on it.

As pharmaceutical companies move into the final stages of vaccine development, it’s looking likely we may soon be able to move away from lockdowns and other movement restrictions. However, the economic scars of the pandemic will remain for a while to come. Whether it’s student debt or another financial burden, many will have to face this reality in 2021. Proper preparation is key to ensuring this doesn’t cause too much stress.

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