Money Moves

Money Moves

The knowledge you need to put your best financial foot forward.

  • Personal Finance
Three Things to Keep In Mind About the Recent Student Loan Pause Extension

Last month, the Department of Education announced they will be extending the pause on student loan repayment, interest and collections through August 31 of this year. During this pause, a decision will be made on whether or not the pause will be further extended or if the idea of student loan cancellation is still on the table. The extension will allow additional time for borrowers who are still finding their way as the economy continues to recover from the pandemic. Borrowers can use this time to make a solid plan for resuming payments to avoid the risk of delinquency and defaults. As we look forward to resuming payments, there are a few things borrowers should keep in mind.

Borrowers may face financial hardships when payments return

While stimulus payments and other pandemic-driven assistance have provided much needed relief for many, delinquency rates on non-student-loan debts have been on the rise over the last year. Recent data from the Consumer Financial Protection Bureau shows that these numbers are expected to continue to rise as loans go back into repayment. Student loan borrowers who are already experiencing hardship can expect to face additional financial strain when loan payments resume. With Purdue Federal Credit Union, you don’t have to face financial challenges alone. Reach out to our financial counseling team for free, confidential assistance regardless of membership. We’ll help you create a plan to build a solid foundation.

Borrowers may receive unnecessarily high bills

Some student loan servicers have been known to create barriers that stand in the way of borrowers’ access to lower payments and loan forgiveness under income-driven repayment plans and Public Service Loan Forgiveness (PSLF). Multiple servicers have made false or misleading statements to borrowers about their options in an attempt to dissuade them from seeking lower payments or forgiveness under PSLF. The cost of this misinformation could add up to thousands of dollars in loan balances that should be eligible for forgiveness through income-driven repayment or PSLF. As we begin to plan for repayment, it’s important that borrowers have access to these existing programs for relief. Check out our on-demand webinars that cover all of the bases when it comes to understanding student loans and your options.

Borrowers may experience servicing transfers

Over the last several months, millions of borrowers have noticed their loans have transferred from one servicer to another. These transfers will continue through the end of the year. As loans get transferred between servicers, there are increased opportunities for errors. Student loan borrowers can confirm who their servicer is by visiting the Department of Education’s website

Student loans can be confusing but at Purdue Federal Credit Union, we offer a variety of ways for our members to learn how to make the most of them from blog posts, to interactive courses, to financial counseling. We’re here to be your financial partner for life!

The information and topics featured are for informational purposes only and does not constitute legal, tax or financial advice. All financial situations and circumstances are different and may not apply to the specific information provided. Seek the advice of a financial professional, tax consultant, or legal counsel to obtain guidance specific to your needs.