GREENSBORO, N.C. — President Biden has now extended the pause of federal student loans until May 1, but experts say now is the time to prepare for the eventual payments.
"A lot of people have not had a student loan payment since March 2020 and so a lot of people have gotten used to that extra money inside of their budget and by May 1 that money may go away," said Ja'Net Adams, the CEO of EMACK Consulting.
Adams dug her way out of $50,000 of debt, $25,000 of that was in student loans and she now uses her experience to help others with money issues. For those who can afford to pay their loans now, Adams said now is the time.
"If you’re paying extra to your principal, that student loan balance is going down, it’s going down faster so you’re actually winning," Adams said.
Payments on federal student loans are now paused, with interest at 0%. Debt collection efforts are also suspended. The measure was put into place in March 2020 and has been extended several times, but it was set to expire on January 31.
More than 36 million Americans have federal student loans, totaling more than $1 trillion. In North Carolina, more than 1 million people have federal student loans. The average student loan borrower in North Carolina owes more than $25,000, according to the North Carolina Attorney General's Office.
Kayla Albert took out $14,000 to get an associate's degree from ECPI in 2013. She said the pause at the beginning of the pandemic helped her family in a tough situation.
"I had just switched jobs and I got furloughed two weeks after starting," said Albert. "I had just come off maternity leave as well so we had to use a lot of savings to get us through maternity leave and so I wasn’t sure where my car payments or student loans payments were gonna come from. So having that forgiveness really helped (give me) peace of mind."
Albert said she is now able to make the student loan payment but she is still grateful for the recent pause.
"I’m able to continue to use this time to my advantage and pay other things down and put myself and others in a better spot financially and hopefully start aggressively paying (my student loans) off as well so it’s not something I have to worry about in the future," Albert said.
Adams advises that even if you can't make your payments now, start thinking toward the future.
"Start saving the money now, getting it into, maybe a separate savings account so that way when those bills start to come in it won’t feel overwhelming and won’t be financial stress in your life," said Adams.
If you have multiple student loans, Adams said to focus on the one with the lowest dollar amount, rather than focusing on the interest rate.