Because of the coronavirus pandemic, millions of people have not had to repay their federal student loans.
Well, that’s about to change when the administrative forbearance ends on Dec. 31.
According to Federal Student Aid, your monthly payments will resume at a new amount when the forbearance ends.
“The 0% interest period and administrative forbearance are currently set to expire on Dec. 31, 2020,” FAFSA officials stated on the FAQ. “Your servicer will contact you ahead of time to remind you that you will need to start making payments again. Make sure your contact information is up to date in your loan servicer account profile.”
So what exactly does it mean for you once the forbearance ends?
It means borrowers will start getting billed sometime in January, and if you’re in default, you’ll be subject to wage garnishments, tax refund seizures, and offsets of Social Security benefits.
If you think you won’t be able to start repaying your loans, you have options.
According to Nerd Wallet, if you can’t pay the monthly payments, you can apply for an income-driven repayment plan to avoid default.
Another option that could help is to pause payments through forbearance or an unemployment deferment, Nerd Wallet stated.
This would halt your costs, but you’d be accruing interest during the pause. You can ask to make interest-only payments, so you don’t have to owe more than you already do.