Under then-president Donald Trump, the federal government took decisive action to temporarily pause interest charges and suspend payments for certain federal student loans until Sept. 30, 2020. Trump extended the pause until Dec. 31, 2020. When Joe Biden became president, he also extended the student loan interest and payment suspension moratorium.
This is in effect until Sept. 30, 2021.
What Does This Mean For You?
Any federal government-held federal loans are eligible for the interest waiver. On March 30, 2021, the waiver was expanded to include FEELP (also called FEEL) loans in default private lenders hold.
However, the government will not cover any interest on private student loans that private lenders or College Ave hold.
Will Your Mandatory Monthly Payment Change On Your Federal Student Loans?
Yes, it will. Any government FEEL loans and Federal Direct Loans are deferred automatically until Sept. 30, 2021.
Any in-default Federal Family Education Loan Program loans are also included in the payment and interest waiver suspension moratorium as of March 30, 2021. It’s a retroactive change, and loans will return to good standing with the ED. The credit bureaus will also clear their default records.
You can check out the Coronavirus and Forbearance help page of the Federal Student Aid website to learn more about the program.
Be sure to review your monthly student loan statements for possible changes and learn if the CARES Act covers your loans.
Is There Help For Non-Federally-Backed Government Loans?
If your loans are FFEL and are privately held, you could also benefit from the moratorium. You’ll need to call your student loan provider to learn more.
If, for any reason, you are unable to make your payments, be sure to reach out to your loan service provider to learn what options are available. You could benefit from a temporary deferment or forbearance, which would suspend your payments for a period of time.
3 Tips To Help Parents Logically Fund For Their Child’s College Spending Habits
Most parents are worried about the biggest expenses of their child’s education – tuition, housing, textbooks, etc. However, it’s wise to devise a plan that includes a budget for their spending allowance.
How much is enough for spending cash for your college-aged student? This exact number will depend on various factors, but the average is $2,000 a year (or $200 a month). When determining the best amount, there are a few helpful tips:
Set and Abide By An Agreed Amount
Your child may qualify for grants or scholarships, which come with strict rules about how the money can be used. These financial aid sources are only applicable to eligible education expenses such as tuition and fees, textbooks, room and board, and transportation.
Financial aid does not cover extra costs such as late-night pizza deliveries or trips to the movies. As such, they are going to need some extra spending cash, and how much is dependent on three key things:
Be sure to talk with your child before they go to college. Talk with them about their goals, their social and academic plans, and how the spending money will be used. Will they be involved in a sorority or fraternity? Will they get involved in any sports? If so, they’ll need to use the money on these activities.
Agree On Who Provides The Spending Money
Sit down with your child to determine who will provide the spending money. If money isn’t that big of an issue, you can give them some money every year. Be sure you abide by the limits you set, even if you’re being asked to provide more. Rather than giving in to their requests, suggest they earn money for themselves through a part-time job or working while on summer break.
Lay down some ground rules on how the money is spent. If the money is spent all in the first month, you won’t give them any more money, and any debt they accrue is their responsibility to pay back.
You could always set up an account on a budgeting app such as You Need a Budget or Mint. These apps will keep tabs on their spending and money habits.
If your child needs more money than you can provide, find out what they can do to earn more money when they’re in school.
Take A Look At The Spending Budget Each Year
Make sure you and your child review the spending money plan every year, revising it as necessary. Budget adjustments may be necessary, so keep that in mind.
A look at your child’s college experience will give you an idea of what the semester will look like. Go over the spending together – learn what the most common expenses were, if they faced any problems and what improvements can be made to their money management skills.
For instance, a child who spends more of their money in the coffee shop may want to purchase a high-quality coffee machine for their dorm. If the money is spent on groceries or eating out, you could skip the meal plan. If the money is going toward clothes, suggest a resale or thrift shop, or even a clothing subscription site.
Open communication with you and your child will help establish good financial habits that they can take with them beyond their college years.