For the past 39 months, student loan borrowers enjoyed a grace period where no principal payments on their loans were required, and interest was not accruing. Unfortunately for these borrowers, this grace period is coming to an end. As of September 2023, student loan borrowers will no longer be granted a grace period where principal payments on their loans are waived and interest does not accrue. This change affects over 43 million borrowers in the US, with federal student loan debt exceeding $1.6 trillion. It is crucial for borrowers to plan ahead and consider how this will impact their finances. Check out the information below for more details on the end of forbearance and how to prepare if you are affected.
End of Student Loan Forbearance Facts:
- The forbearance period ends in August 2023
- Payments WILL resume in September 2023 (No extension!)
- Does NOT affect student loan forgiveness case!
How to Prepare:
- Review your payment options
- Standard vs. Graduated vs. Income Based, etc.
- Understand your minimum required payment
- Start budgeting now!
- Review fixed and discretionary costs (Be disciplined!)
- Start cutting discretionary spending
- Review the interest rate on your debt
- Compare to other debts
- Attack higher interest rates first
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Marshall Clay CFP, J.D., is a Partner and Senior Advisor at The Welch Group, LLC, specializing in providing Fee-Only investment management and financial advice to families throughout the United States. Marshall is a graduate of the United States Military Academy in West Point, New York, the Cumberland School of Law in Birmingham, Alabama, and is a CERTIFIED FINANCIAL PLANNER™. In addition, Marshall is a frequent guest on local television stations as an expert on various financial planning matters.
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