President Joe Biden has extended the student loan relief until February 1st. When Congress passed the extension for the administrative forbearance, student loan borrowers received some reprieve through a payment freeze and by setting interest rates at 0%.
This relief was going to last until September 30, 2021. With Biden’s extension of student loan payments, borrowers can expect to resume repayments on February 1, 2022. In his statement, Biden intended this extended forbearance period to help Americans who remain struggling to provide for their families amid the global pandemic.
You can take advantage of the student loan payment freeze by using the money you save from monthly student loan payments to cover bills essential to your survival. Here are some suggestions.
Pay Off High-Priority Bills
You can use the money you save from student loan forbearance to cover utilities and housing debt. The Federal Reserve reports that typical student loan payments range between $200 and $299. You could channel your extra funds into these essential bills, considering the financial hardship that the pandemic brought on every household.
Pay Off Other Loans
Student loan experts agree that borrowers may be wise to use the money they save from paying student loans to cover other loans that charge high interest rates. Consider paying off any car loans, credit card balances, or mortgages while the student loan payment freeze remains in effect. Paying off these high-interest loans while you have the chance may help you save more once student loan repayments resume in February 2022.
Build Your Emergency Fund
While the global pandemic sees no end any time soon, the extended student loan forbearance period may be an opportunity to save your extra money for emergencies. If the forbearance period ends as scheduled, you may struggle to adjust once you have to resume paying your student loans. Having some extra money prepared is a good idea to transition into repayment smoothly.
Continue Paying Student Loans
If you are in a financially stable position despite the pandemic, consider taking advantage of the zero interest rates by paying off your student loans as usual. Any payments you make on your student loans while the interest rate is zero will go toward your principal balance. This way, you could potentially pay smaller amounts in interest once interest resumes accruing in February.
Conclusion: President Biden Extends Student Loan Payment Freeze Through January
The student loan forbearance extension provides borrowers relief from paying student loans and sets interest rates at zero. This extension will last until January 31, 2022. So, borrowers can expect to resume making monthly payments on student loans by February 1, 2022.
While the payment freeze remains in effect, you can take advantage of the forbearance period by using the money you save to focus on paying off higher-priority bills or other loans. With three more months of savings on student loans, you may have more to use on car loans or mortgages that continue to accrue interest.
Of course, Biden meant for this forbearance extension to relieve borrowers amid the global pandemic financially. Also, consider that you may need an emergency fund to help you transition back into repayment once payments and interest accrual resume in February. Be sure to reassess your financial situation to determine where you may channel your savings from paying monthly student loans.