By Susan Hoffman
Edge Managing Editor
Update: On August 24, the Biden administration said that the student loan payment pause will be extended until December 31, 2022. Read the White House’s statement for further details.
To give higher education students some financial breathing room during the COVID-19 pandemic, the federal government created a temporary student loan payment pause (also known as loan forbearance) in March of 2020. According to the Department of Education’s Federal Student Aid website, this loan payment pause included:
- A temporary suspension of loan payments
- A 0% interest rate
- Stopped collections on defaulted loans
However, the student loan payment pause is set to come to an end on Wednesday, August 31. Unless this program is extended, you will need to resume paying off your student loan. You will also receive a notice from the Department of Education (ED) about continuing your payments.
Which Types of Loans Were Eligible for the Student Loan Payment Pause?
The loan payment pause covered five types of loans. For our University students, these two types of student loans were eligible for the loan payment pause:
- Direct Loans held by ED
- Federal Family Education Loans (FFEL) held by ED
The Federal Student Aid website enables you to quickly determine if the ED holds your student loan. Just log in to the Federal Student Aid website, find the “My Aid” page and see if the servicer name starts with “DEPT OF ED.”
Why Is It Important to Pay Off Your Student Loan?
Paying off your student loans is essential to a healthy financial future. If you default on a federal student loan (a loan is in default if you haven’t paid off the loan for a period of 270 days past the due date), the government will take steps to recover the missing funds by garnishing your wages or seizing your tax refunds.
In addition, your credit score may decrease if you default on a student loan. According to USA.gov, having a high credit score is helpful when you want to apply for a major loan (for instance, when you’re buying a house or a car), rent a place to live, or apply for a credit card.
A bad credit report could also affect your chances of employment. If you choose to apply for a position with a federal agency or state government – especially if the position involves getting a security clearance – having a healthy credit report is useful.
National Financial Awareness Day is August 14! Learn how to make your finances healthier.
Struggling to Pay Off Student Loans? Help from Different Sources Is Available
If you are having a difficult time repaying your student loan, there are various resources available to you. First, consult your loan provider to discuss repayment options and building a payment plan that works for you. If you have more than one loan, you may be able to consolidate those loans into one monthly payment.
Second, consider contacting the University’s partner, ECMC SolutionsTM. ECMC Solutions has trained counselors that can assist you in finding the right repayment plan. You can reach them through live chat Monday through Friday (9 a.m. to 7 p.m. ET), by email or by calling 877-331-3262.
Our Financial Aid Department Offers Various Services to Assist You
If you need assistance or have questions regarding financial aid, including federal loans, you can contact a Financial Aid Advisor. You can email email@example.com or call 855-731-9218 from Monday – Friday, 8 a.m.- 9 p.m. ET, and Saturday – Sunday 10 a.m.- 6 p.m. ET.
ECMC is a registered trademark of the Educational Credit Management Corporation.