How to use the student loan debt moratorium to improve your finances
NEW YORK (WABC) -- Currently, 45 million people carry nearly $1.7 trillion in student loan debt.
The Federal student loan moratorium has been extended until next January 31.
In the meantime, payments won't be due and interest will not accrue giving recipients four to five months to get in a better financial place when payments resume.
First tip, if your income has dropped during the pandemic you can apply for an income-driven replacement plan. This will cap your loan payment around 15% of your income.
You can also apply for public loan forgiveness if you work for the government, a non-profit or serve in the military.
If you're a teacher, you can qualify for loan forgiveness totaling $17,500, as long as you've taught for five consecutive academic years in a low-income school.
But, if you're not able to qualify for forgiveness, the moratorium is perfect time to reconfigure your budget or increase your income, putting you in a better place when payments start back up.
Some big takeaways: If you have high interest, like credit card debt, during the moratorium reallocate your student loan payment amount to pay down that debt.
Or, if you can afford to, continue paying down your student loans during the moratorium to take a bite out of your principal and previously accrued interest.
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