Student loan relief is extended until Jan. 31, 2022. Here's what you need to know. The debt relief provided to federal student loan borrowers has been extended into next year, but the Department of Education says don't expect another reprieve. Under the Coronavirus Aid, Relief and Economic Security Act, or Cares Act, federal student loan payments and interest were suspended to help folks struggling to make ends meet because of the pandemic. Collection actions on defaulted loans were halted. So was negative credit reporting for eligible federal student loans, meaning the Education Department reported suspended payments to the major credit bureaus as if they were made on time. The pandemic-related relief was scheduled to end on Sept. 30 but now the forbearance has been extended for another four months, until Jan. 31, 2022. Here's what you need to know about the forbearance extension. When will I have to start paying my student loans again? If you were eligible, your payment pause should have started in March 2020. It was supposed to last just six months. However, this latest extension means payments will restart in February 2022. It's important to remember that time frame. A study last month by Pew Charitable Trusts found 52 percent of borrowers affected by the pause were unsure when they would be required to resume payments. Pew said its findings show that many borrowers will need assistance transitioning back to repayment. As with the initial forbearance, collection actions on defaulted loans were halted. How likely is it that there will be another extension? The Education Department made a point of emphasizing this would be the last extension. "This additional time and a definitive end date will allow borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart," the department said in a news release. Secretary of Education Miguel Cardona also indicated it is a "final extension," saying in a statement that the additional time will "ensure a smooth pathway back to repayment." The Biden administration was under pressure to extend the forbearance for federally held student loans, especially in light of the recent extension of the eviction moratorium for renters. Many borrowers say they are still having trouble managing their bills as a result of the pandemic, according to the Pew study. Two-thirds of borrowers who took the survey this spring said it would be difficult to afford their student loan payments if the payment suspension ended the following month. There is also concern that with the number of coronavirus cases increasing because of the delta variant, businesses will have to shut down or scale back, resulting in a rise in the number of people out of work. In a June letter to President Biden, Democrats in the House and Senate argued that restarting payments may result in a wave of student loan defaults. Following the announcement that the payment pause would be extended, Sen. Elizabeth Warren (D-Mass.), Senate Majority Leader Charles E. Schumer (D-N.Y.), and Rep. Ayanna Pressley (D-Mass.) issued a statement praising the administration. "We're pleased the Biden administration has heeded our call to extend the pause on federally-held student loan payments, providing an enormous relief to millions of borrowers facing a disastrous financial cliff," the lawmakers said. Was it a mistake to take advantage of the forbearance when I could have afforded to make my payments? Many people need this break. But many borrowers not affected financially by the pandemic kept making their loan payments — because, at zero percent interest, all the money went directly to reducing the loan principal (once any interest that accrued before March 13, 2020, was paid). This was a smart money move. Some people took the opportunity to catch up on some bills or concentrate on paying down high-interest credit card debt. And that's fine. But it was a mistake to take the payment holiday if you could afford to make the payments and you didn't have any other pressing financial issues. If you haven't been making payments and can afford to do so, now you have additional time to reduce your debt. It's not necessary for folks working toward Public Service Loan Forgiveness to continue making payments. Under the PSLF program, the remaining balance of a borrower's debt is forgiven after 120 qualifying monthly payments. If you qualify for PSLF, the suspension of loan payments won't put you behind. It is as if you are making on-time monthly payments. Is there anything I should do when loan repayments resume? The Education Department said it will soon begin notifying borrowers about this final extension and will provide borrowers with resources and information about restarting their payments. Your servicer should contact you before the forbearance is over to confirm when you need to start making payments again. However, if you don't receive any communication, contact your servicer to make sure you know your due date. A lot of people moved during the pandemic. You may have moved in with your parents or a family member, or relocated to save money. It's important that you contact your loan servicer and update your address. Don't assume that because you haven't been contacted you aren't responsible for resuming your payments. You risk accumulating late fees and perhaps even defaulting on your loan if you fail to restart making your monthly payments. It is your responsibility to pay your loans on time, even if the lender doesn't know how to find you. You should also update your contact information in your profile at studentaid.gov. Keep in mind, if you had set up automatic payments, they may resume on your first due date when the forbearance period ends. What should I do if I can't afford my payment once the pause is over? If you haven't already, ask your loan servicer about enrolling in an income-driven repayment (IDR) plan. Depending on your income and family size, under an IDR, your payment might actually be zero. You can get an estimate of your monthly payment under different IDR plans by going to studentaid.gov. If you were already in a plan and your income or family size has changed, you can request that your payment be recalculated, which could reduce what you owe each month. I received an email from a company offering to help reduce my student loan debt. Is this legit? Here are three signs of a debt scam, according to the Consumer Financial Protection Bureau (CFPB). ·You're asked for an upfront fee to help you sign up for an income-driven payment plan. ·You're promised quick debt forgiveness. ·You're required to provide your Federal Student Aid identification, or FSA ID, which is the username and password you use to log on to Education Department student aid websites. Do not give this information to anyone. Read: Desperate for relief from student loan debt? Just don't fall prey to scammers. Do not pay anyone to do something you can do yourself. Your loan servicer can walk you through the various repayment options. And if you feel you aren't getting the assistance you need, file a complaint with the CFPB at consumerfinance.gov. Reader Question of the Week If you have a personal finance or retirement question, send it to colorofmoney@washpost.com. In the subject line, put "Question of the Week." Please note that questions may be edited for clarity. Q: I am a bit addicted to couponing, and knowing my mom is not using her $11 coupon (Good for anything you want in the store) is giving me high anxiety. The expiration date is coming! Is she really about to throw away $11 just like that? A: It might surprise you to know that I'm not addicted to couponing. In fact, one of my personal mantras is, "You never save when you spend." I repeat this expression to myself whenever I'm tempted to feel as you do, that by not using a coupon I'm losing money. But that's not true. People often say, "I'm saving money," when there's a sale or they've received a coupon. However, the act of saving is something entirely different. It's putting money in a savings account or investing. Using a coupon is the act of spending less than you would at full price, hence "you never save when you spend." And often, even with a coupon, you may spend more than you intend. Merchants use coupons to lure you into the store, knowing that you'll spend more than the $11 or the discount being offered. I need you to read one of my favorite books, " "Dollars and Sense: How We Misthink Money and How to Spend Smarter," by Dan Ariely and Jeff Kreisler Here are two major points Ariely and Kreisler make in their book: - "Discounts are a potion for stupidity. They simply dumb down our decision-making process. When an item is 'on sale,' we act more quickly and with even less thought than if the product costs the same but is marked at a regular price." - "When we see a sale, we shouldn't consider what the price used to be or how much we're spending. Rather we should consider what we're actually going to spend. Buying a $60 shirt marked down from $100 isn't 'saving $40.' It is spending $60." Read my review of the book: Your spending problem is all in your head — here's why Here's another column that may help you not worry about an expiring coupon: Extreme couponing may not be saving you as much money as you think. Here's why. And if you're looking to boost your savings, read: Want some cash? Here are five places to look for unclaimed money. In Retirement News Part of planning for retirement and then living on the money you've saved or invested for retirement is keeping up with the issues that you need to know. In this section, I feature blogs, news stories, new research, surveys, and government policy changes that could affect your retirement. If you see a news story or issue you think would help folks, let me know and I'll check it out and share it with newsletter subscribers. This week, let's talk about a piece of retirement legislation making its way through Congress. Dubbed "Secure 2.0," the legislation would follow the Setting Every Community Up for Retirement Enhancement or Secure Act, which was enacted in 2019 and supported by both political parties. The Secure Act contained significant provisions related to retirement, such as increasing the age that a required minimum distribution (RMD) must start from 70½ to 72. The proposed rule under Secure 2.0 would again increase RMD – this time to 73 -- starting Jan. 2022. In 2029, the age limit would increase to 74 and then move up to 75 starting in 2032. Under the Secured Act, a new rule required plan sponsors to provide workers with an annual disclosure showing what their monthly (and lifetime) income would be if they converted their plan savings to an annuity with a guaranteed stream of income. Read: Confronting the truth about 401(k): Your retirement savings may not last as long as you think. The Secure Act also affected IRAs or 401(k) accounts left to beneficiaries. As part of their estate planning, people are allowed to pass along whatever is left in their tax-advantaged retirement accounts. Under an old provision, if you inherited an IRA or defined contribution plan -- such as a 401(k) – from a non-spouse, you had to take required minimum distributions (RMDs), but a beneficiary could extend the withdrawals over his or her lifetime to minimize the tax hit. This strategy was referred to as a "stretch IRA." But the Secure Act imposes a 10-year window to draw down the money. There are no required minimum distributions, but beneficiaries must take all the money that's left and close the account after a decade. IRAs inherited before Dec. 31, 2019, can still use the stretch strategy. For more on this change, read: No, your IRA was never intended to be a vehicle to pass along your wealth Under Secure Act 2.0, after 2021, employers that set up defined contribution plans would be required to automatically enroll new employees at a pretax contribution level of 3 percent of the employee's pay. Another provision would increase the amount for "catch-up" contributions. Under current law, employees 50 or older can make extra catch-up contributions to a 401(k) or similar plan up to $6,500. But, as SHRM points out, the catch-up contribution would be treated like a Roth IRA, which would mean the money would be taxed up front. "Presumably to allow the government to reap the income tax benefits sooner than it otherwise would," wrote T. Lake Moore V, an attorney at McAfee & Taft in Oklahoma City. You may want to read up on the retirement changes under Secure 2.0 as outlined by the House Ways and Means Committee. What are your thoughts on the proposed provisions? Send your comments to colorofmoney@washpost.com. Please include your name, city, and state. In the subject line, put "Secure 2.0." Responses may be edited for clarity. Retirement Rants and Raves What are your thoughts about saving for retirement? If you're retired, how is it going? What advice would you have for others about retirement? This is your space to rant or rave about anything related to retirement. Send your comments to colorofmoney@washpost.com. Please include your name, city, and state. In the subject line put "Retirement Rants and Raves." Responses may be edited for clarity. | 
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