MILWAUKEE — It’s been almost two years since federal borrowers have had to pay principal or interest on their debt. The moratorium was recently extended until May 2022.
Recent UW-Milwaukee graduate Jack Kovneksky is one of 41 million borrowers across the country affected by the temporary pause in federal student loan repayments.
“I just feel like it’s the best option for me and everyone right now,” Kovensky said.
West Allis’ Kovnesky still has $27,720 on his student loan. He says a hiatus in payments during the pandemic gave him some financial freedom.
“I’ve mostly saved it and that’s wonderful, because it goes towards things like potential rent every time I move and stuff and that’s been really nice,” he said.
Student Loan Hero reports in Wisconsin that the average borrower saved $6,349 due to not making their monthly payment during this 25-month moratorium.
Kovnesky may not be making those monthly payments, but he certainly stays on top of student loan news.
There have been five extensions of the moratorium during the pandemic, not to mention the constant talk of debt cancellation.
Just last week, TMJ4 News reported relief for more than 4,000 federal student loan borrowers in Wisconsin who used the Navient loan service. The company has reached a nearly $2 billion settlement with dozens of states to settle claims that it used predatory practices. Navient denies the allegations.
Student loan counselor Andrew Pentis warns borrowers that Navient news isn’t a “debt card” for everyone.
“I would consider that kind of the icing on the cake,” said Pentis, who is senior writer for Lending Tree’s Student Loan Hero.
“It definitely shouldn’t be a central part of your strategy to keep hope alive. Whether Navient is your repairer or not, you should continue to be responsible and be proactive about your payment,” Pentis said.
Pentis adds that some borrowers will experience a change in their federal loan service, which means their loan would be transferred to another contractor to collect their payments.
The moratorium gives you a few months to reconnect with your new repairer.
For borrowers who fear they won’t be able to resume payments on May 1, Pentis advises asking your loan officer for forbearance beyond that date.
It says you can also apply for an earnings refund plan that caps your monthly contributions and what you pay is based on how much you earn.
If you’re financially sound, Pentis reminds borrowers that there’s no interest on federal student loan payments through May.
“One hundred percent of these voluntary payments would be used to attack the principle of your balance assuming you have no unpaid interest or fees on these loans.”
For more information on the latest federal student loan repayment moratorium, click here.
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