3 student loan changes in 2022 borrowers should know
The student loan industry has undergone significant reforms in recent years during the coronavirus pandemic, and many of these changes will impact borrowers in 2022. Here are some changes that student loan borrowers should be aware of over the course of time. of the next year:
- Payments (and interest charges) start again in May
- Many borrowers will have a new loan service
- It may be easier to qualify for a student loan forgiveness
Read on to learn more about what to expect for your student loan debt in 2022, and consider your other student loan repayment options, like refinancing. You can compare the student loan refinance rates on Credible to determine if this debt relief strategy is right for your financial situation.
STUDENT LOAN REFINANCING RATES SET A NEW RECORD
1. Payments (and interest charges) start again in May
Federal student loans have been on administrative forbearance since March 2020, when Congress passed the CARES Act relief program. Meanwhile, payments have been suspended and interest is not accruing on student loans held by the government.
The Biden administration has released several forbearance extensions, the last of which was in December amid the emergence of the omicron variant. But the current extension expires in April, which means federal student loan borrowers will have to resume their payments in May.
The exact date to restart payments will depend on a borrower’s payment due date before the pandemic. For example, a borrower who paid off their student loans on the 15th of the month will have to restart payments from May 15, 2022.
Borrowers who are unable to resume their payments in May are at risk of becoming delinquent on their student loans, which can lead to a payday garnishment. If you need more time to prepare for your student loan repayment this spring, consider asking for up to 36 additional months of federal forbearance as part of an economic hardship or request to defer the loan. unemployment.
You may also want to consider other debt repayment options, such as refinancing a private student loan at a lower interest rate to lower your monthly payments. Keep in mind that refinancing your federal loans to a private loan will make you ineligible for certain government benefits such as income-tested repayment plans (IDRs), COVID-19 administrative forbearance, and certain exemption programs. student loans.
Visit Credible to see your estimated student loan refinance offers without impacting your credit score.
WILL PRESIDENT BIDEN CANCEL STUDENT DEBT WITH EXECUTIVE ACTION?
2. Many borrowers will have a new loan service
Several leading student loan managers, including Navient, FedLoan Servicing, and Granite State Management & Resources, have left the federal student loan services market. Borrowers whose loans have been managed by these institutions will have their loans automatically transferred to a new manager.
Borrowers whose loans have been transferred to a new student loan manager should already have received email communications through the Office of Student Financial Aid (FSA). The Biden administration began advising borrowers about student loan service transfers in November.
If your student loan manager has changed, your loan terms, including monthly payment, due date, and interest rate, will remain the same. But if you’re not happy with your current loan terms, you may want to consider refinancing when student loan refinance rates are near historic lows.
Refinancing your student debt at a lower interest rate can help you lower your monthly payment, pay off debt faster, and save money on interest over the life of the loan. Use Credible’s Student Loan Refinance Calculator to determine if this debt repayment plan is right for you.
DEMOCRATS WILL PUSH BIDEN TO CANCEL STUDENT LOANS AFTER THE HOUSE REBUILD BETTER PASS
3. It May Be Easier To Qualify For A Student Loan Discount
The Department of Education has announced significant changes to several federal student loan exemption programs in 2021, which will make more borrowers eligible for loan cancellations in 2022 and beyond. One of the most radical overhauls has been made to the Public Service Loan forgiveness program (PSLF).
The PSLF program allows public servants to pay off the remainder of their federal student debt after making 120 consecutive qualifying payments. Under the extended temporary PSLF waiver, eligible borrowers who apply to the program will be able to count a greater portion of their student loan payments against this balance.
The Biden administration estimates that the recent PSLF update will bring 550,000 borrowers roughly two years away from their student loan cancellation, on average. Borrowers with Federal Family Education Loans Program (FFEL) loans and Federal Perkins loans will need to join the Direct Loans program by October 2022 to be eligible.
If you have loans that are not eligible for student loan cancellation, such as private student loans, it may be a good idea to refinance for better terms. Check if you are eligible for a lower student loan interest rate by prequalifying for free on Credible.
COLLEGE COSTS INCREASED TO NEARLY 5X INFLATION RATE, REPORT
Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.