The federal government just announced (2/1/2021) an extension to the currently deferred federal student loans.

“Federal student loan repayment suspension and 0% interest rate have been extended through at least Sept. 30, 2021.”

Back in March 2020, the federal government began providing the temporary relief on ED-owned federal student loans: suspension of loan payments, stopped collections on defaulted loans, and a 0% interest rate.

Basically this means, if you have a federal student loan owned by the ED, no interest will accumulate during the deferral period and the current interest rate is temporarily set to zero % and no payments are required during the deferral period.

There are strategic reasons to take out federal student loans and this is currently one of the reasons.

Let’s say you hand the money to pay for college but you decided to take out a federal student loan anyway. You could take the money that you were going to pay for college and put it into an interest-bearing account. Even at 1% you could be better off earning a little interest than not. Then when the loan becomes due, pay off the loan and keep the interest. (This is not financial advice; it is just an idea.)

If you have a federal student loan you can check your status here https://studentaid.gov/fsa-id/sign-in/landing. You will need your FSA ID to login.

If you have a federal student loan, more than likely you will be contact by a third party to consolidate your federal student loans. If one consolidated the federal student loans with a third party, those loans are NOT eligible for the deferred COVID Emergency Relief program.

There is no fee for the payment suspension or 0% interest rate. Your student loan servicer provides free help with your questions or concerns about your loan payments. Beware of scammers.

If you have questions on any of these federal student loans or would like to discuss some strategic planning to get into college, get scholarships and grants and or plan on how to best pay for college, please contact me.

For more info on the Emergency Relief Program click https://studentaid.gov/coronavirus

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Uncategorized by J.D Wyczalek