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What the second stimulus means for student loans

No relief planned for borrowers after January 31, 2021 — but there are ways to keep costs down.

Updated

Fact checked

While lawmakers failed to include student loan relief in the $900 stimulus bill that passed through Congress, there are other options if you're looking to lower your student debt.

When will I need to start making repayments?

Unless any new executive orders or bills pop up, federal forbearance ends on January 31, 2021. This also means that collection efforts and wage garnishment — which have been paused since the CARES Act passed — will resume. Interest will begin to accrue again, so expect to start making full repayments on your federal student loans.

3 ways to reduce student debt in 2021

It may be the end of the interest-free period on federal student loans, but you have other options to help handle your debt.

Consolidate federal loans

If you currently make multiple federal student loan repayments each month, you may be able to borrow a Direct Consolidation Loan. It simplifies your monthly payments and averages your interest rates. You'll pay about the same overall, but it's an option to get all your federal student loans in one place if your payments currently hit at different times of the month.

Consider a different repayment plan

There are multiple federal student loan repayment plans that can help lower your monthly payment by extending your loan term. But be cautious: A longer loan term means you pay more in interest. This is a solid option if you know you'll be in a better financial position after the pandemic, but it can result in higher overall cost if you aren't able to make additional payments toward your loans.

Refinance private loans

While many private lenders also offer hardship deferment and payment forbearance, it's typically only available for three months. If you're in a decent financial spot and have good credit, you may be able to refinance your private loans to lower your interest rate or monthly payments.

But be cautious if you're thinking about privately refinancing your federal loans. You may be able to lower your interest rates, but you won't be able to take advantage of any federal forbearance if it becomes available in the future.

See private student loan refinancing options

If refi is the best option for you, compare providers and see if you qualify today.

Data indicated here is updated regularly
Name Product Min. Credit Score Max. Loan Amount
EDvestinU Private Student Loans
675
$200,000
Straightforward student loans for undergraduate and graduate students.
CommonBond Private Student Loans
700
$500,000
Finance your college education through this lender with a strong social mission and terms that fit your budget.
Edvisors Private Student Loan Marketplace
Varies by lender
Varies by lender
Quickly compare private lenders for your school and apply for the right student loan.
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Compare up to 4 providers

Is student loan forgiveness still on the table?

While the new stimulus bill makes no mention of forgiveness as it stands, President-Elect Joe Biden has supported forgiving up to $10,000 in student debt per borrower. This would most likely come as an executive order — not part of a stimulus bill — and Biden has no official plans to issue forgiveness.

But pay attention to the new Department of Education. Biden’s platform contains reforms to current student loan repayment and forgiveness programs. Repaying your student loans might work a little differently once Biden is in office.

Bottom line

Biden has announced plans to seriously take on the student debt crisis. But until then, it may be time to compare your student loan options for when federal forbearance runs out early next year.

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