On December 4th, 2020, Education Secretary Betsy DeVos announced that the administrative forbearance on federal student loans would be extended to January 31st, 2021. This means that borrowers with federal student loans are not required to make payments on those loans until February 2021, barring any further legislative or executive action. This announcement also extends the 0% interest rate on all federal student loans.
For most federal loan borrowers the best strategy would be to take advantage of the break and stop payments on your federal loans until you have to resume payment in February.
We are also keeping an eye on any action the Biden administration might take regarding student loans, as there’s talk of canceling some amount of federal student loan debt for eligible borrowers. This means that those of you whose loan payback strategy includes aggressively paying down your student loans to minimize interest payments over time might want to scale that back until we know more about possible federal student loan cancelation. We will certainly stay on top of this and keep clients updated on any action that might affect you and your financial plan.