Experts suggest planning ahead for student loan payments; payment pause expires Jan. 31
TUCSON, Ariz. (KOLD News 13) - As the federal student loan payment pause is coming to an end on Jan. 31, the Office of Scholarship and Financial Aid at the University of Arizona is advising borrowers to start planning ahead for payments.
Art Young, executive director for the UA Office of Scholarship and Financial Aid, said regardless of servicers, payments will be due again for borrowers in the month of February. He said people need to start reaching out to servicers now to ensure their information is up to date and their payment plans are feasible.
“I think some people have been sort of hoping that there is going to be mass loan forgiveness and all though that seemed like a possibility six to nine months ago. It seems like that will not be happening in the future,” Young said. “The good news is there are some other options financially speaking. With the pandemic, I would say it’s safe to say government loan servicers will be as flexible as they’ve ever been before because they understand what’s happening.”
Young stressed the importance of paying loans on time. He said if you cannot afford a loan, you need to reach out to your servicer to discuss options. If you do not pay on your student loans, it could lead to default, causing bad credit and other severe consequences.
“If you’re not able to pay, be honest and upfront with your loan servicing provider,” Young said. “Let them know your situation and then they can provide some options as to how to move forward without damaging your credit or future eligibility for federal student aid.”
According to a recent study published by Student Loan Hero, Arizonans are among the most indebted federal and private student loan borrowers in the U.S., with an average debt of $34,712.
Andrew Pentis, student debt and education finance counselor, said the average Arizonan with student debt pays around $265 per month. Pentis stressed the importance of budgeting to start making those payments again in February.
“You want to make sure you have room in your budget to take care of those payments. You may need to cut back in certain places or increase your income in certain places. If you don’t feel like you can, you’ll want to reach out to your current servicer,” Pentis said. “You may look into an income-driven repayment plan that would cap your monthly dues at a percentage of your income, or pause your payment where interest wouldn’t accrue.”
You’ll want to make sure your account is up to date with your information. If you have any questions about your loan’s status or your loan payment plan, you can reach out to the Department of Education. If you want to change your payment plan, because you can no longer afford that amount, experts suggest giving your servicer a call to see what options are best.
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