Calling all College Grads, September will be the Last Month to Reduce your Student Loan Payments!

Want to pay less AND save more on your college loans? Don’t worry that’s not an oxymoron! If you have federal loans for undergrad or grad school, now is the time to explore your payment options! Due to the pandemic, the new administration has put most federal loans in forbearance (frozen) until September 30, 2021. This is unprecedented because the freeze includes BOTH subsidized and unsubsidized loan interest. Normally interest is only frozen on subsidized loans (during deferments like grad school), or not at all. Two things you should consider before the forbearance is lifted:

1) Make as large a payment as you can afford on your loans NOW - it will save you more later.

Why you should do this: The payment will be applied to frozen loans, versus loans that are accruing

interest (increasing) daily.

2) Change your repayment plan now so that you’ll be ready for the payments starting in October (which could be reduced to $0).

Why you should do this: Most grads are automatically put on a Standard 10-Year Repayment Plan. However, if you are not making a living wage, there are options that can reduce your loans to as low as $0/month with no penalty.

Some repayment options to consider are:

I. Income-Driven Repayment Plans (IDR): BASE YOUR LOAN PAYMENTS ON YOUR INCOME. The LESS YOU MAKE the LESS YOU HAVE TO PAY, which could be nothing. Please note you have to RENEW THE APPLICATION EVERY YEAR.

APPLY ONLINE, or your loan provider should have the form on its website. You can also view the PAPER APPLICATION. Find out more info on IDRs in this VIDEO.

Other options that don't require a form, just contact your loan provider:

II. Forbearance: A temporary freeze on your loans, but it still adds interest (MORE MONEY TO YOUR LOANS). SEE IF YOU QUALIFY FOR IDR FIRST. Note this is different from deferment. Deferment is most commonly used during grad school, whereas forbearance only requires financial hardship.

III. Graduated Repayment: Your payments START LOWER AND GET HIGHER approximately every two years.

IV. Extended Repayment: If you have more than $30,000 in loans you can change from a 10 to a 25-year repayment plan (so you PAY LESS EACH MONTH), but note this means PAYING MORE MONEY LONG-TERM BECAUSE OF INTEREST. Note: You can ask to combine Graduated with an Extended Repayment Plan!

Not sure what your monthly payment is yet, or want to know how various plans could decrease it? CALCULATE the different options for yourself. Questions? Email: TGlickman@allwaysup.org.

So take action this month to save money and best wishes as you continue your post college journey.