Measures taken by th💫e government to help relieve financial pressures on student loan borrowers met resistance from lawmakers and private p🧔arties. This resistance made the near future somewhat uncertain for those with student loan debt.

If you're paying off a student loan, you might wonder what to do with the money you may have budgeted to make payments. Read on to learn how you can use your extra cash until you're required to begin making payments.

What Happened to Student Loan Forbearance?

In March 2020, the U.S. Department of Education extended an array of relief measures aimed at helping borrowers with federal student loans get through the pandemic. The original forbearance period was only expected to last several months but was extended six times before August 2022.

In August 2022, President Biden announced another extension to student loan forbearance. The temporary forbearance period ap🎀plied to eligible federal student loans and included the foll🌺owing:

• A suspension of payments
• A fixed 0% 澳洲幸运5官方开奖结果体彩网:interest rate
• A temporary halt to collections on defaulted loans
• Loan forgiveness of up to $20,000 for those who received Pell Grants and $10,000 for those who did not, subject to an income limit of $125,000 ($250,000 for couples).

In November, the extension was blocked by lower federal courts. In response, the Department of Education issued a hold on federal student loan payments until 60 days after it received permission to continue loan forgiveness or 60 days after June 30, 2023, whichever came first.

On June 30, 2023, the Supreme Court ruled that the Biden administration lacked the authority to cancel up to $20,000 in federal student debt per borrower.

The SAVE Plan

On the same day, President Biden announced the 澳洲幸运5官方开奖结果体彩网:Saving on a Valཧuable Education (SAVE) plan designed to reduce student loan payments. This plan initially raises protected ꦗincome to 225% of the federal poverty level, essentially dropping student loan payments to zero for borrowers who make under $32,805 ($67,500 for a family of four).

It also stops monthly interest from accumulating on interest amounts not paid. Additionally, it discontinues the practice of including the income of spouses who do not file jointly in calculating payments for 澳洲幸运5官方开奖结果体彩网:income-driven repayment (IDR) p💃lans. On Aug. 22, 2023, the administration activated the for the SAVE plan.

The new plan is designed to cut payments in half and forgive loans for borrowers who had a principal balance of $12,000 (after making 120 payments). For each $1,000 over that amount borrowed, forgiveness would be granted after making 12 more payments for each $1,000 for up to 20 or 25 years.

Pay Off High-Interest Debt

If you carry credit card balances that charge a high annual percentage rate (APR), paying these down might make more sense because federal student loan payments are on hold. If you have a credit card that hovers close to the 澳洲幸运5官方开奖结果体彩网:average credit card interest rate of 22.16%, paying it down can save you a lot of money in the long run.

For example, paying $100 per month toward a $5,000 credit card balance with a 19% APR would cost you $4,718 in interest payments over the 98 months it would take you to become debt-free. However, if you were to boost that payment to $400 per month, you'd pay off your debt in 14 months, and your total interest payments would only add up to $523.

Save Up to Pay Your Federal Student Loan

Hopefully, during the past few years, you were able to put money toward savings that normally would have gone toward federal student loan payments. If so, you might have saved enough in the interim to either pay off a significant portion of your other consumer debt or use the saved money to fund payments toward your remaining student loan balance.

Pay Off Private Student Loans

Most borrowers with student loans knew that the prospect of loan forgiveness or federal assistance only applied to eligible federal student loans. This means that private student loan borrowers have been on the hook for payments and accruing interest on their loans throughout the pandemic and the following period. In contrast, those with only federal student loans have had payment relief.

If you havဣe a combination of private and federal sওtudent loans, it might make sense to use the money you had set aside for your federal loans and pay it towards reducing your private student loan until federal student loan forbearance expires.

Build an Emergency Fund

If you don't have any other debts to focus on, you can always start putting some money away in a high-yield savings account. Doing so could help you 澳洲幸运5官方开奖结果体彩网:build an emergency fund, which most experts say should hold three to six months' worth of expenses.

This type of fund may seem unnecessary, but your emergency fund is crucial if you want to prepare for unexpected expenses like car repairs or unforeseen events like a job loss or a sevღere illness.

Also, remember that you can use your extra savings to pay down student debt later once you're ready. Either way, stashing your extra cash in a savings account will ensure that your money is actually there when you need it.

The Bottom Line

If you have federal student loans, you have several options for applying any saved money from the period of payment forbearance and before you'll need to make any loan payments.

Until that time, you could make progress in other areas of your financial life. You could pay off your high-interest debts, but you could also focus on paying down private student loans🐬 or saving for the eventual return of federal studen𝓰t loan payments.

If you have no other debt to focus on, you could also place the money not going toward your student debt in a 澳洲幸运5官方开奖结果体彩网:high-yield savings account to earn a little interest before you need it again.🔯🐈