How To Prepare For The Expiration Of The CARES Act: Student Loan Payments And Interest Rates

In March of 2020, Federal student loan borrowers were given a break from having to make their student loan payments, with interest rates frozen at 0%. This policy was originally an Executive Order, which then became part of the CARES Act, and was extended by both the Trump and Biden Administrations.

Unfortunately, our break from student loan payments and interest accumulation must come to an end and is set to sunset on January 31, 2022. Following this date, millions of borrowers like you and I will be required to resume our monthly student loan payments *sad trumpet*.

Throughout the pandemic, many of us lost jobs, found new ones, were married, divorced, or completely changed our lifestyles. These circumstances change our repayment plan options for student loans, and some of us may even be eligible for Public Student Loan Forgiveness (PSLF).

Resuming student loan payments will change up our finances and we need to be prepared for impact. These payments will reduce our spending money, so we may be forced into less nights out celebrating the end of our lost year…

CURO’s recommendation: Connect with your loan officer/servicer to discuss the changes to your cash flow & life since the freeze. Talk with them about payment plan options, reduced payments, or deferment options. Make sure that you have a plan in place prior to January 31, 2022.

In addition to cash-flow changes, our preferred tax filing statuses and chosen retirement savings vehicles could be impacted by the resumption of student loan payments. Contact your financial advisor or give us a call to learn more about potential impacts and opportunities.

Those of us borrowers who are on a standard, fixed monthly payment plan will resume our pre-pandemic payments beginning in February 2022. Borrowers who focused on savings or who had increased earnings throughout the pandemic may try to make greater payments on loans to remove debt from their balance sheet.

Borrowers on Income Driven Repayment (IDR) Plans (plans tied to a fixed % of borrower’s discretionary income) may want to avoid paying down their debt to $0. People on these IDR plans may be pursuing a forgiveness strategy which will cost them less than fully paying off their debt.

Learning what opportunities have become available to us via life changes in the past 18 months is crucial to making the most of our student loan repayment plans. Reach out to your loan servicer prior to January 31, 2022, to ensure that you’re making the most of your money.