TOLEDO, Ohio (WTVG) – As part of the coronavirus relief package, student loans have been deferred with no payments required and no interest accrued since March. But that is set to expire and borrowers will have to start making payments again next month.
Many student loan borrowers saw their balances shrink for the very first time during this relief period. Since loan payments often do not cover the interest, student loans can often grow as time goes on.
One Perrysburg man is in that position. Despite making payments for the last 15 years, Nick McClelland has only paid $31 of his principle, and the interest has grown by nearly $15,000.
He’s enjoyed paying down debts over the last few months, but he’s bracing for those debts to grow again starting next month.
“I thought maybe at 50 I’d pay it off, and I’d be teaching, and I’ll order all the kids pizza to celebrate, but now I don’t think that’s going to happen any time soon,” says McClelland.
For many borrowers like McClelland, these last few months have been nice, but it doesn’t really change their overall financial situation in any way.
However, many are still suffering due to the pandemic and cannot afford to start paying again.
According to Scott Ciolek, a lawyer specializing in student loans, the best thing to do is to show that you’ve made a good faith effort to pay your loans. This means getting on a payment plan you can afford.
If you want to do that, you should talk to your servicer right away.
“I would start the application already, if you weren’t already in a payment plan that you liked, I would apply for one right now because if you apply for one right now, you can beat the rush when all the people start applying in about three weeks,” says Ciolek.
That good faith effort makes you a better candidate for loan forgiveness and bankruptcy write-off.
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