Update: the pause on federal student loan repayment has been extended through May 1, 2022.
Repayments Are About To Restart
The pandemic has given student loan borrowers a break, but it's time to get back on track. The Federal Government will start making interest rates and repayment plans again in 2022 after the moratoriums come to an end on the last day of January.
It's important to know how much you owe to either get prepared for monthly repayments or seek financial help if it feels like you are not able to pay at the moment.
Millions of Borrowers Will Have a New Servicer Next Year
But this is not the only change borrowers will see in the next year. Due to stricter guidelines, the Department of Education has changed the servicers for the loans at Navient, Granite State Management & Resources, and the Pennsylvania Higher Education Assistance Agency, which includes around 10 million borrowers. FYI, the servicer is the company hired by the federal government to take care of payments and billing.
Federal student loan holders are encouraged to check the status of their loans and contact federal servicing centers through Federal Student Aid's website. Missing a notice could lead borrowers into delinquency or, worse, bankruptcy if they miss payments without realizing it was changed.
More Loans Are About to Get Forgiven
The Department of Education is finally making it easier for borrowers to take advantage of Public Service Loan Forgiveness (PSLF). Borrowers hoping that their loans will be forgiven through this program must work for qualified government or 501(c)(3) organizations and make at least 120 on-time payments.
The program has been expanded to include more borrowers, and now those with both Direct Loans from the government as well as other types of federal student loan debt can benefit. Prior to this change, over 550K people were left out in what was effectively an exclusion zone because their payments didn't count toward meeting PSLF requirements. Now, they’ll have to make 23 fewer payments on average, and 22,000 more borrowers will be eligible for immediate loan forgiveness.
As lots of changes are coming next year, make sure to be prepared and aware of all the information for the transition to be smooth and painless.
This is not legal, financial, or professional advice. Please consult a legal, financial, or professional advisor for your specific situation.
