- President Joe Biden’s administration has extended the freeze on student loan debt repayments until early 2022.
- Borrowers should expect changes in their student loan repayments, including a change in loan managers.
- Borrowers should take advantage of these last few months of hiatus to pay off as much of their student debt as possible.
If you are afraid to resume student loan debt repayment in October, you must have rejoiced when President Joe Biden’s administration extended the payment freeze for an additional four months.
Biden’s administration extended the freeze until the end of January 2022, and officials have clarified that this is the last extension.
This means that around 42 million student loan borrowers should therefore be prepared to resume repayment in just a few months.
The pause on pause on student loan debt payments has been in place since March 2020.
If you are a borrower, there are three things you need to know before the payment freeze ends.
- The date of the first payment invoice
It’s important to note that the most recent and final extension of Biden’s student loan debt payment freeze ends on January 31, 2022. This means that as a borrower, you should expect your first bill. payment in February 2022.
One of the things you need to take care of is updating your contact details with your loan officer. Make sure information such as phone number, email address, home addresses, and mailing address are up to date. This will ensure that you receive all important communications from your repairer.
- Changes to student loan debt repayment
Biden administration officials are working on a new way to repay borrowers when the freeze on student loan debt payments ends. According to a report by Politics, the administration is considering introducing a number of flexibilities to help you easily switch to reimbursement. These include:
- Temporary freeze on late payment penalties: You may be offered a 90-day grace period during which you will not be penalized in the event of late repayment.
- Return in good standing: If you default on your federal loans, you could be automatically put back into good standing.
- Requirements of the relaxed repayment plan: If you are applying or seeking recertification for income-oriented plans, you may need to meet more flexible requirements. These include allowing you to apply over the phone with your loan manager. These measures aim to reduce application delays.
It should be noted that these flexibilities have not yet been finalized, but are under consideration. In the meantime, you should contact your provider for more details on the monthly payments which are expected to start in February 2022.
In addition, if you think your financial situation is worse than before the start of the pandemic, you can ask your loan officer to recalculate your payments under a income based repayment plan.
You can also check out this list of payday loan providers in case you need them for your student loan repayment.
- Your loan manager could change
Major loan managers have indicated that they will no longer offer their services to the federal student loan system of the US Department of Education. Loan officers are just entrepreneurs for the Department. Therefore, a change in loan officer will not affect the terms and conditions of your federal student loan. It also does not affect your ability to access federal student loan programs in the future.
Still, here’s what you need to know about changing student loan managers:
- For borrowers who were served by Navient, their loans will be transferred to a company called Maximus.
- For those who were served by FedLoan Servicing, their loans can be transferred to a new servicer on which the Department of Education has not yet given details. There are reports of some loan accounts from this server being transferred to a company called Mohela. However, it is not clear if all FedLoan student loan accounts will be transferred to this manager.
- For other Department of Education loan services, like Great Lakes and Nelnet, they have not indicated they are withdrawing their services. As such, their contracts were extended by the Department for two additional years.
Paying off student loan debt: final thoughts
While you might be tempted to stay “on break” from paying off your student loan debt until the break is over, continuing to make your payment is a good idea. It will be even better if you pay more than your regular payment if you can afford it.
It is therefore advisable to take advantage of these last months of moratorium to pay off as much as possible this student debt.