El Paso, Texas- The Biden administration has extended the payment freeze to May of this year. So what does this extension actually mean?
Local financial professional Brian Mirau breaks down what you can do during this time on a recent interview during ABC-7 at Noon.
Q: WHAT CAN BORROWERS EXPECT FROM THIS EXTENSION?
President Biden recently announced federal student loan payments will remain on hold through May 1st, 2022. The hold was originally set to expire on January 31st.
Federal student loan payments have been paused meaning those in the repayment phase of their loan are not required to make their regular payments. Also, their balance is not accruing interest at this time.
The freeze is meant to bring financial relief to more than 40 million student loan borrowers still navigating the financial impact of the pandemic.
Q: WHAT SHOULD STUDENT LOAN BORROWERS DO IN THE MEANTIME?
Keep Making Payments
You don’t want to be hit with a late payment fee, or worse, go into default. You can set up an automatic withdrawal to avoid missing a payment. Many services will give you a small interest rate break for setting up autopay.
If you are struggling financially, consider taking advantage of the freeze.
Look Ahead to the Future
Grads will regret it later on if they put off saving for retirement until they’ve paid off student loans.
Saving early - even if it’s just a small amount - is crucial because it allows money to grow through compounding interest.
We recommend saving at least 10% of your salary in your employer-sponsored 401(k) plan. If you can’t manage that, consider contributing at least enough to get the company match.
Q: THERE’S A PUSH FOR PRESIDENT BIDEN TO CANCEL THOUSANDS OF DOLLARS IN STUDENT DEBT. IS IT POSSIBLE TO DO THAT?
Some on Capitol Hill have called for President Biden to relieve up to $50,000 in student loan debt per borrower. President Biden has also proposed canceling up to $10,000 of federal student loan debt per person regardless of their income.
There has been no real movement on either of these suggestions.