SPRINGFIELD, Mass. (WWLP) – The COVID-era pause the government put on federal student loans is coming to an end on Sunday.
22News spoke to student loan councilors Friday to get a sense of how student borrowers can get ready to repay. After a more than three-year reprieve, student borrowers will have to get ready to start paying off their debt on October 1st as the pandemic-era pause expires.
If you are a student loan borrower, there are some things you need to know. There are two types of repayment plans for federal loans to choose from. The first is an interest-driven plan with payments based on your balance and interest rate. The second is an income-driven plan with payment based on income and family size.
“If you have a large income, and you have a low balance, then then you probably want to do one of the interest-driven repayment plans and get that out as quickly as possible. If you have a low income and a large balance, you are probably going to want to go on an income-driven repayment plan,” Todd Friedhaber, Student Loan Manager at Cambridge Credit Counseling Corp.
For those who can’t get their finances in order to pay, the federal government has created a temporary on-ramp period.
“So people will not get a hit on their credit if they miss a payment as this is going on. They are actually not going to report late payments to the credit bureau for at least a year,” Rich O’Connor, Director of Financial Aid at American International College said.
Loan experts suggest making your budget then logging on to studentaid.gov to find your servicer and picking one of those payment plans.
Student Kylee Rinker saved for college but finds it hard to set aside money for loans with the high cost of living, “it goes really fast especially with like working you can only work like 10 hours for like financial aid or being a student so it doesn’t pay any bills really.”
A good place to start and to find your loan servicer visit studentaid.gov.