Student Loan Payments Officially On Pause Until 2021
As part of the relief efforts in response to the viral pandemic, lawmakers are now making an effort which includes federal student loan relief, which means borrowers won’t have to make their student loan payments and won’t be penalized for nonpayments. However, experts advice that if you’re carrying student debt and can still afford the monthly payments, then you absolutely should even though it’s not required.
The relief only applies to federal loans owed to the U.S. Department of Education. It does not apply to private student loans. The CARES Act, which provided temporary relief on student loans earlier this year through September, has extended the relief through December 31, 2020. Zero interest provides a win for student loan borrowers with money to pay and those that don’t, providing even more reason to keep paying to help you pay off the loan more quickly.
Image via Student Loan Hero
Normally when making repayments on student loans, a chunk of the monthly payment goes toward interest, but under the CARES Act, interest is waived on monthly payments so the entire payment will go toward the principle balance of the loan. If you already have a savings fund and you’re not in bad debt due to credit cards or personal loans, continue to pay your student loans to save more money. The more you owe, the more you can save. Balances and regular interest rates will show up on January 1, 2021.
Feature Image via Black Enterprise