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Student loan counselor tells borrowers how to prepare once payment freeze ends in May

student loan savings
Posted at 6:27 AM, Jan 19, 2022

MILWAUKEE — It's been almost two years now that federal student loan borrowers haven't had to pay principal or interest on their debt. The moratorium was recently extended to May 2022.

Recent UW-Milwaukee graduate Jack Kovneksky is one of 41 million borrowers across the country impacted by the temporary pause on federal student loan payments.

"I just feel like this is the best option for me and everybody else right now," Kovensky said.

Kovnesky of West Allis has $27,720 left on his student loan. He says a break in payments during the pandemic has given him some financial freedom.

"I've been saving it mostly and it's wonderful, because it's going toward things like potential rent whenever I move out and stuff and it's been really nice," he said.

Student Loan Hero reports in Wisconsin, the average borrower has saved $6,349 as a result of not making their monthly payment during this 25-month moratorium.

Kovnesky may not be making those monthly payments, but he's certainly staying on top of student loan news.

There have been five extensions to the moratorium during the pandemic, not to mention constant discussions about debt forgiveness.

Just last week, TMJ4 News reported relief for more than 4,000 federal student loan borrowers in Wisconsin who used loan servicer Navient. The company made a nearly $2 billion deal with dozens of states to settle claims it used predatory practices. Navient denies the allegations.

Student loan counselor Andrew Pentis warns borrowers the Navient news isn't a "get out of debt free card" for everyone.

"I would view that as kind of a cherry on the top," said Pentis, who is a senior writer for Student Loan Hero by Lending Tree.

"Certainly it shouldn't be a central part of your strategy to hold out hope. Whether Navient is your servicer or not, you should continue to be accountable and be proactive about your payment," Pentis said.

Pentis adds some borrowers are going to be experiencing a change in their federal loan servicer, meaning their loan would be transferred to a different contractor in charge of collecting their payments.

The moratorium gives you a few months to reacquaint yourself with your new servicer.

For borrowers who worry they won't be able to resume payments on May 1, Pentis says ask your loan servicer about a forbearance beyond that date.

He says you can also request an income driver repayment plan which caps your monthly dues and what you pay is all based on how much money you make.

If you are a good financial spot, Pentis reminds borrowers there's no interest on federal student loan payments until May.

"One-hundred percent of those voluntary payments would go toward attacking the principle of your balance assuming you don't have outstanding interest or fees on those loans."

For more information on the latest moratorium on federal student loan payments, click here.

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