TAMPA, Fla. — On Jan. 31, 2022, the federal government's deferral of student loan payments comes to a close. That deferment was put in place in March of 2020 to help those struggling financially due to COVID-19.
The Biden Administration made the announcement in August of 2021 that one final extension would be made, ending the payment pause after the new year. The announcement was made to give borrowers enough time to transition smoothly into repayment plans.
But these payments kick back in just a month after the holiday season, and for most, that's not the most ideal time of year to be adding back additional bills.
"With the upcoming holidays, we're going to have tons of distractions," Mary Jo Terry, a student loan expert and managing partner at Yrefy said.
Whether we like it or not, or - more importantly - are prepared or not, Terry said this is something everyone should be thinking about now.
"You have to think about what that student loan payment is, and how it'll impact your current budget and expenses. You also have to think about: were you on auto-debit?," Terry said.
According to Forbes, the average American's student loan debt is $37,693. To check the status of your loans, or if it is still with the same service, experts recommend you use www.studentaid.gov.
If you're in a different financial situation than previously, there could be an opportunity to continue the deferment.
"If you're still unemployed and hit by COVID, there are unemployment deferments available," said Terry.
Terry said, next to a house payment, student loan debt is oftentimes the largest debt an individual has. Which is a scary thought when people have gotten used to spending the money that went towards loan payments on other things over the last year and a half.
There are resources online, including through your loan provider to help you navigate preparing for payments. While you can wait until the deadline to prepare, planning now can give you some peace of mind.
"It's going to be worth your mental health and it's going to be worth your financial health," Terry said.
Editor's Note: An earlier version of this article indicated borrowers could potentially have money coming out of their accounts when auto-debit resumes if they were previously enrolled in autopay. The U.S. Department of Education says that's not exactly right. A spokesperson says borrowers are being contacted and asked to update their auto-debit information and indicate whether they wish to re-enroll. The story has been updated accordingly.
