Student loan forbearance no longer ending January 31st, 2022
President Biden announced on Wednesday, December 22nd that student loan forbearance will receive yet another extension. The new start date for loan payments will be May 1st, 2022. Ninety days beyond the previously agreed-up start date.
The CARES Act forbearance has placed most federal student loans on pause since March 2020 and faced many extensions in the past. President Biden sited ongoing Covid-19 turbulence as the reason for this change and said, “the Department of Education will continue working with borrowers to ensure they have the support they need to transition smoothly back into repayment and advance economic stability for their own households and for our nation.”
If you have student loan debt it’s more important than ever to identify the best use of this cashflow savings. I’ve advised some of my clients to continue payments while the loans are on forbearance to benefit from principal reductions. Other clients are focusing their dollars on investing or saving for a house down payment. And of course, there are clients on the PSLF track that should absolutely not be making any additional payments during this time since these 2+ years of halted payments will count toward their 120 required to have their debt forgiven. A customized approach is best when dealing with these unprecedented circumstances.
If you have questions about your current student loan payoff approach, don’t hesitate to reach out to us.