Deferral on Student Loan Payments Extended To December 31, 2020
According to the recent Presidential Memoranda issued on August 8, 2020, payments on federal student loans held by the Department of Education have been deferred until December 31, 2020. The memorandum also includes federal borrowers not having to pay interest during the extended deferment period. Payments toward federal student loan payments will resume on January 1, 2021.
If you are one of the roughly 40 million borrowers, the extension will provide needed relief amid the economic downturn due to the COVID-19 pandemic. The money saved serves as a chance to redirect any additional money toward your savings account, emergency fund, or any essential expenses such as rent, groceries, or transportation. The potential savings will allow you to build extra financial security if an emergency or an unexpected expense pops up.
More than 9 million borrowers have private student loans and will not receive relief under the new order. If you fall into this category and are experiencing financial hardship, call your lender and ask for debt relief options. Ask your lender if they have options where you can defer your payments, temporarily waive accruing interest, or other possible options the company may be offering during the COVID-19 pandemic.
If you are currently employed and not experiencing financial hardship, it is recommended that you continue to make loan payments. Continuing to make payments on your student loans can help you stay on track to pay off your debt; however, be cautious not to overextend your pockets during this period. Gauge your financial comfortability and security during your journey toward debt freedom during the current pandemic.