We’ve all heard of President Biden’s plan to erase up to $10,000 in federal student loan debt for some borrowers and up to $20,000 for Pell Grant recipients.
Michelle Buria, CFP®, MPAS®, Principal of Choreo, LLC visited The Lift on Wednesday to find out what it means for borrowers. For some, this decision will completely eliminate their student loan debt, and for others, it will reduce the amount in the future.
So with the end of the moratorium, here are three things to consider:
1. Update contact information
Michelle says we should visit studentaid.gov and update our contact information. This is how you will be informed about these programs. The Student Loan Forgiveness Plan requires an application process that you will want to complete as soon as possible. Sign up for Department of Education website alerts to find out when this app will be available. You will want to apply before November 15.
2. Review programs and repayment options
You’ll want to stick with the studentaid.gov website for this one — there’s a loan calculator you can use to figure out which repayment plan is right for you.
3. Create a budget
Now create a budget that takes into account the payments you will need to make. It has been three years since borrowers had to repay a student loan. If you’ve stopped paying completely, you might want to consider what adjustments you’ll need to make.
If you have money set aside for repayment, now is the time to target higher-interest debt and build your emergency fund. You should have 6 months – year of living expenses saved. If you still have student loan debt, be sure to make your lump sum payment before the end of the year to avoid accruing interest.