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The pandemic relief for student loan borrowers is scheduled to end on December 31, 2020. What should student loan borrowers be doing to prepare for payments coming due in January 2021?

The CARES Act, which is the Coronavirus relief legislation that passed in March, provided for a temporary period of relief for federal student loan borrowers. Student loan payments were temporarily halted, and interest rates on all federally owned student loans were set at 0% until December 31, 2020. In January 2021, federal student loan payments are scheduled to start up again and your loans will begin incurring interest. Here is a helpful guide on how to prepare for payments coming due in January.

Be on the lookout for notifications from your student loan servicer.

Be on the lookout for a notification from your student loan servicer advising you on your payment plan. Borrowers that were already enrolled in student loan repayment programs prior to the passage of the CARES Act will resume payments in that plan. However, the federal government provides flexibility for borrowers if they wish to change their plan or recalculate their income for an income driven repayment plan.

Also, if you have changed your address, email, or phone number during the COVID-19 period, log in to studentaid.gov to update your preferences and account so that you can be sure that notifications reach you during this critical period.

Recalculating your income could be a great plan for borrowers that have suffered from reduced income during COVID-19.

If your income declined recently due to COVID-19, you should consider recalculating your Income Driven Repayment (IDR) plan to reduce your required monthly payment when the payments start back up again in January. To recalculate your income, go to studentaid.gov and “Manage Loans” and choose the “Recalculate My Monthly Payment” option. This federal loan repayment option gives all borrowers the flexibility to reduce their monthly payment for the next 12 months and submit new income documentation. We recommend that if you choose this option to do so before the end of the year so that the plan can be changed prior to the new year. This option is also potentially a better option than “forbearance” because it can still allow these critical months to count for forgiveness programs like PSLF and IDR plans.

Refinancing could be a great option for borrowers looking to save on their interest rates.

One of the best long-term strategies for student loan borrowers can be to refinance and lower your interest cost, which can save you thousands of dollars over the life of your loans. Additionally, student loan refinance rates are at historic lows right now. Rates may not be this low forever, so locking in a low rate now before the temporary CARES Act period ends can be a favorable option for many student loan borrowers.

Click Here to set up a consultation with GradFin to review your refinancing options

Be sure your payment plan is current and qualifying for Public Service Loan Forgiveness.

The most common mistake borrowers make that leads to being rejected from Public Service Loan Forgiveness is not being in a proper qualifying repayment plan. Now is the time to check to make sure that your plan is set up correctly heading into January. Additionally, we recommend reviewing your repayment plan and making sure your payments were properly counted while they were in the COVID administrative forbearance period. The CARES Act provided substantial relief for federal loan borrowers including allowing the $0 payments to count for PSLF. However, borrowers still need to get those payments counted by recertifying their employment.

Click Here to set up a consultation with GradFin to review your PSLF compliance plan and make sure your payments were counted correctly for PSLF.

For borrowers who graduated in 2020 and are in the grace period, now is the time to get focused.

All borrowers who have been in the 6-month grace period after graduation should be on the lookout for notifications from their federal servicers and private lenders. This might be the first time you’ve ever signed up for a repayment plan or had to review your loans. GradFin can help you identify the best options for your federal and private loans. Choosing the best option now can help you prevent costly mistakes on your student loans.

Click Here to set up a consultation with GradFin if you are a new borrower coming out of your grace period.


Chris Walters - GradFin CEO

This article was written by Chris Walters, the CEO of GradFin. Chris founded GradFin to develop innovative solutions that address America’s student debt crisis. He has helped thousands of borrowers find savings on their student loans and stay in compliance with the Public Service Loan Forgiveness program.

Chris has over 15 years of experience in federal tax law, including working for the U.S. Department of Treasury and the IRS. Chris has a B.A. from Georgetown University, where he captained the Men’s Heavyweight Crew team, and an MBA from the Johns Hopkins University.