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Unless congress passes additional coronavirus relief legislation soon, the student loan forbearance provided by the CARES Act ends on January 31. That means federal student loan borrowers should plan to resume making monthly student loan payments in February, 2022. Unfortunately, the pandemic continues, and many borrowers find themselves unemployed or making much less than they used to. Here’s how to prepare for when coronavirus student loan forbearance ends.

Rework Your Budget

You’ve probably gotten used to having the money normally reserved for student loan payments back in your budget the last several months. Don’t wait until the last minute to account for it. If your financial situation allows it, rework your budget now and start setting aside funds to allow you to resume payments in October.

Investigate Additional Relief

While the across-the-board forbearance will end in September, borrowers who are not able to resume payments should consider placing their student loans in additional forbearance or deferment programs. While both programs will offer suspended payments for a set amount of time, there are a few differences.

A loan deferment may be available based on unemployment, financial hardship, military service or returning to school. Interest charges are subsidized during the deferment, so no interest will accrue.

During forbearance, your payments are suspended, but interest continues to accrue. If you don’t pay the accrued interested by the end of the forbearance period, it will be added to your principal loan balance and increase your payoff amount. Contact your student loan servicer to discuss and apply for deferment or forbearance.

Review Your Repayment Options

Many student loan borrowers don’t realize they aren’t stuck in the initial default payment plan. All borrowers automatically start in the standard repayment plan. This is unmanageable for many, particularly those whose employment and income are suffering because of COVID-19. Fortunately, there are many repayment options available that are more affordable. Our online student loan review can help you determine the best repayment plan for your unique situation. And if you need additional assistance, our certified student loan counselors are available.

Avoid Default at All Costs

The most important thing is to avoid having your student loans go into default. It will take several months before this happens, but once it does, the consequences can be severe and long-lasting. They can include — but are not limited to — wage garnishments, prohibitions on selling or purchasing real estate, and damage to your credit that will make it extremely difficult to borrow at reasonable rates. Borrowers whose student loans go into default also lose access to repayment plans, deferment or forbearance options, and their schools may withhold their academic transcripts.

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