PHILADELPHIA (KYW Newsradio) — College students and recent college graduates are getting an end of the year gift. Student loans that had been placed on hold through the pandemic were expected to come due on December 31. Now that deadline has been pushed back to the end of January.
The CARES Act has extended forbearance on federal student loans until January 31. That's good news for students and recent grads, who are unemployed because of the pandemic. But eventually those loans have to be paid.
Cindy Axelrod, associate professor at Temple University's Fox School of Business, and deputy Finance Department chair, said there are options to reduce your financial burden. One of them is an income-based repayment plan.
"Life resumes. However, if there's someone that is still struggling to make their payments, is still unemployed, has been laid off, they do have some options there. They can apply to have an income-based repayment plan."
She continued, "If you're not employed, it could be that you don't have the payment for a certain amount of time as well. This isn't something that could go on forever, but it is an option that's there."
For some who have private loans, Axelrod said you can also refinance.
"With interest rates being as low as they are, that certainly could be an option for you," she said.
Many banks are now offering refinancing on student loans at between 2.5 and 3%. However, you cannot refinance a federal loan.
Whatever kind of loan you have, Axelrod urged people to figure out a budget to be able to pay expenses, and pay down loans. She said there's still a month and a half to get a game plan together, and make sense of your finances.
The main thing, she advised, is to stay in touch with your lender, and explain your situation.
