If you have federal student loans, you’ve probably seen e-mails reminding you that payments will restart after January 31. During the pandemic, the federal government suspended payments on federal student loans, with no interest accrual on loan balances.
If your budget can’t handle payments on your federal student loans, you may be eligible to lower them by enrolling in an income-driven repayment plan. There are several IDR plans available through the Department of Education, but all base your monthly payments on your earnings. If you’re already enrolled in an income-driven plan and your income has declined a lot, you can also ask your loan servicer to recertify your income and recalculate the payment.
You can apply for an IDR plan on the federal Student Aid website and select the plan you qualify for with the lowest monthly payment. You may pay more in interest because you’re extending the repayment period, but after 20 years of payments, you may be eligible to have the balance forgiven.
Another option is to refinance your loans with a private lender. At below 3%, interest rates are enticing. But read the fine print on any offer you consider. Some plans offer low interest rates in the first year and hike them later. To avoid interest rate hikes down the road, look for a low fixed rate rather than a variable rate.
If you can’t afford to make payments, you may qualify for deferment or a forbearance. There are two types of deferments: economic hardship and unemployment deferment. You must be out of work to qualify for the unemployment deferment, but you may qualify for economic hardship if you receive federal or state public assistance, you’re a Peace Corps volunteer, you work full-time but earn less than or equal to the federal minimum wage, or you have income that’s less than or equal to 150% of the poverty line for your family size and state (about $26,000 a year for a two-person household).
Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.
How to Cushion Your Business Bank Account in an Uncertain Economy
Putting these practices in place can help your business weather the storm if economic disaster strikes.
By Clay Bethune Published
Stock Picks For 2024
Investors seeking out the best stocks picks for 2024 may want to focus on these four areas of the market.
By Simon Constable Published
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
Five Ways to a Cheap Last-Minute Vacation
Travel Procrastinator? No matter. You can pull off a fun and memorable getaway on a moment's notice — without breaking the bank.
By Vaishali Varu Published
How Much Life Insurance Do You Need?
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
By Kimberly Lankford Published
When Is Amazon Prime Day?
Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
By Bob Niedt Last updated
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published
5 Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Rates are high this year, but you can still find an affordable loan.
By Daniel Bortz Published
Retirees, It's Not Too Late to Buy Life Insurance
life insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.
By David Rodeck Published
How to Benefit From Rising Interest Rates
Financial Planning Savers will get the best rates from top-yielding savings and money market deposit accounts at online banks.
By Rivan V. Stinson Last updated