Student Loan Payment Relief Set to Expire

MINNEAPOLIS – Student loan borrowers take note: A pause on federal student-loan payments is set to end when February rolls around. The moratorium on payments has been in place since March 2020 because of the pandemic, but it will be lifted Jan. 31.

Andrew Pentis, senior writer and certified student loan counselor for the group Student Loan Hero, said the average student loan payment for Minnesota borrowers is $254 a month, which can be quite a weight on the typical family budget.

The good news is when breaking down debt levels for borrowers around the state, those owing less than $10,000 dollars make up the highest percentage.

“So, that’s a little more realistic and easier to afford in terms of repayment, as opposed to those borrowers with much higher balances,” Pentis explained.

Pentis advised borrowers to contact their loan servicer before the pause on payments is lifted, and check into their options.

He pointed out people also could opt to continue the pause on their payments, but he believes a better situation for many borrowers is to opt for an income-driven repayment plan.

“What those plans do is cap your monthly dues at a percentage of your income,” Pentis emphasized. “If you’ve lost your job or perhaps seen your wages cut, your new monthly payment on your federal student loans would reflect that change. You could qualify for a monthly payment as low as $0.”

While there was talk of mass student-debt forgiveness at the beginning of Joe Biden’s presidency, Pentis noted the option is looking less likely, but added there have been changes under the Biden administration, such as a fix to the Public Service Loan Forgiveness program to make it easier for government and nonprofit workers to qualify.

“What’s much more likely is that the Biden administration will continue to offer targeted loan forgiveness to groups that are particularly struggling with their student-loan debt,” Pentis projected.