Due to the COVID-19 pandemic, all federal student loan borrowers were automatically placed in a period of mandatory administrative forbearance in March 2020. For borrowers, this meant that in addition to a break from payments, all the interest rates on federal student loans were automatically set to 0%. In other words, no interest has accrued since March 2020. However, the forbearance period is scheduled to end on January 31, 2022. Here is what borrowers can do to prepare for the resumption of payments early next year:

For financially stable borrowers
For federal student loan borrowers who don’t have other high interest debt, or whose financial situation hasn’t been impacted by the pandemic, opting out of the forbearance period may be a good option. With the interest rate currently set to 0%, any student loan payments will go entirely towards paying off principal balance. This can help borrowers pay off student loans sooner. Since loans are on automatic forbearance, a borrower will need to contact their loan provider to continue making payments.

For borrowers who are struggling financially
Those experiencing financial hardship as a result of the pandemic should take advantage of the forbearance period and not make their federal student loan payments until February 2022. Their money could be used instead to pay higher priority bills, such as mortgage or rent. With no interest accruing until February, borrowers won’t be penalized for not paying student loans at this time, and mortgage lenders or landlords may not be as forgiving. To prioritize what payments are affordable, continue to pay the bills that aren’t offering a temporary pause on both the principal balance and interest. For example, if a credit card debt has a high interest rate, pay that off first, instead of continuing to make student loan payments that aren’t yet required.

Get organized – This is the right time to get everything in order for February, when payments must resume. For example, if a borrower had automatic withdrawals set up for monthly payments prior to the pandemic, and has since changed financial institutions, be sure to update that information with the student loan provider. Or if a borrower has moved or changed a phone number, this is the time to update that information with the loan provider. Experts predict long wait times for people trying to call student loan providers early in 2022, so updating the information soon will be easier than waiting.

Budget now for student loans – Those who haven’t been making student loan payments since March 2020 may have gotten accustomed to not having to budget for that expense. The wise course of action is to start budgeting for future payments now, even though payments won’t officially be due until February. This can help determine what might need to be cut from a budget to be able to pay back student loans.

The U.S. Department of Education has emphasized that this will be the last extension of forbearance. “As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” the department said in a recent news release.

February may seem far away, but it’s better for borrowers to plan ahead to ensure financial security.