Student loan repayments will resume on February 1, 2022, but here’s how President Joe Biden plans to help.
Here’s what you need to know and what it means for your student loans.
Despite repeated calls from progressives in Congress, advocates and student loan borrowers, the Biden administration will end student loan relief for the Covid-19 pandemic as of January 31, 2022. That means your payments federal student loan loans will be due again as of February 1. 2022. Progressives have sought to extend student loan relief or three months, six months, or until the end of the Covid-19 pandemic. They say failure to provide more student loan relief will cost student loan borrowers $ 85 billion, hurt the economy, and bring financial ruin to a generation of Americans. (Here’s a list of everyone who wants Biden to extend student loan relief.) The Biden administration, which plans to release more details of its plan to restart student loan payments, said this student loan relief has always been temporary and student loan borrowers have enjoyed nearly two years of relief. substantial relief from student loans and student loan cancellations. This is in addition to the $ 12.7 billion in student loans that Biden has canceled since becoming president. Here are several ways Biden can help student loan borrowers as they start paying off student loans again. (No, Biden will no longer extend the student loan relief).
1. Grant a grace period to student borrowers
When student loan payments start again on February 1, it’s important to note that your student loan payments are necessarily due on that date. Check with your student loan manager to confirm when your student loan payment is due. Biden may give student loan borrowers a one-time grace period of up to 90 days when student loan payments start again. (Why Biden Ended Student Loan Relief). Therefore, if you make a late student loan payment or pay an incorrect balance, your credit report will not be affected. On the contrary, you can be placed on temporary abstention during this grace period. The aim is to facilitate the transition to restarting reimbursement after a 22-month hiatus.
2. Provide direct assistance to needy student loan borrowers
The US Department of Education has already contacted some student loan borrowers who are among the estimated 16 million student loan borrowers who may have new student loan service next year. Student loan services such as Navient are leaving the federal student loan service, meaning you can start making federal student loan payments to a new business starting next year. The Department of Education may also reach out to other groups of borrowers, such as those who have recently graduated, borrowers in arrears or defaulting on student loans, or borrowers with debts. student loans who did not graduate from college.
3. Offer more customer service
“Student loans” and “customer service” may not be the best friends in the world, but the Department of Education expects an increase in questions and demands from student loan borrowers as repayment student loans restart in February. As such, expect student loan managers to have increased customer service and maybe more hours to provide more student loan support.
4. Cancel student loans for borrowers in default?
Senator Elizabeth Warren (D-MA) and her colleagues have called on the Biden administration to cancel student loans for the roughly 7 million student loan borrowers who are in default on their federal student loans. These student loan borrowers, many of whom struggled financially before the Covid-19 pandemic, could still suffer financial setbacks. As such, additional student loan relief, which may include student loan cancellation, may be a potential option. (Biden will cancel student loans for millions of borrowers, but Congress has not passed any laws).
5. Simplify income-driven repayment plans and make the process easier
When student loan repayments begin again, student loan borrowers will have a plethora of options to choose from. For example, forbearance and postponement of federal student loans will be opportunities for borrowers who are in financial difficulty. A better option may be to sign up for an income based repayment plan such as IBR, PAYE, REPAYE and ICR. Your monthly student loan payment for your federal student loans, which will be based on your discretionary income, your family size, and your state of residence, could be as low as $ 0 per month. For a limited period of time, the Biden administration may allow student loan borrowers to self-certify income and family size. This can help ease the administrative burden on borrowers as they navigate the restart of student loan payments. With an income-based repayment, borrowers can also get their student loan canceled after 20 or 25 years. (How to qualify for the automatic student loan exemption).
Don’t Expect Student Loan Cancellation Until Student Loan Relief Ends
Despite the latest headlines on student loan cancellation, don’t expect Biden to enact a full-scale student loan cancellation before student loan relief ends. It will not happen. If canceling the student loan within the next month is your primary student loan repayment strategy, it’s time to reassess the strategy. Biden will continue to cancel student loans on a targeted basis. For example, the Department of Education will cancel $ 2 billion in student loans in the coming weeks. It is also possible to request a public service loan forgiveness or a borrower’s defense on repayment, for example, to obtain the partial or total cancellation of a student loan. However, don’t expect $ 50,000 student loan cancellation, $ 10,000 student loan cancellation, or any other amount for all student loan borrowers.
Now is the time for you to take control of your student loans. Make sure you understand all of your student loan repayment options.
Here are some popular ways to save money and pay off student loans faster: