3 student loan changes in 2022 that borrowers should know about

The New Year brings a number of changes for student loan borrowers, including a return to federal student loan repayment. (iStock)

The student loan industry has seen significant reforms in recent years during the coronavirus pandemic, and many of those changes will affect borrowers in 2022. Here are some changes that Student Loan borrowers should be aware of over the next year:

  1. Payments (and interest charges) will resume in May
  2. Many borrowers will have a new loan service provider
  3. It can be easier to qualify for student loan waiver

Read on to learn more about what to expect for your student loan debt in 2022 and consider your alternative student loan repayment options like refinancing. You can compare student loan refinance rates on Credible to determine if this debt relief strategy is right for your financial situation.

FIXED REFINANCING RATES FOR STUDENT LOANS SET ANOTHER RECORD LOW

1. Payments (and interest charges) will resume in May

Federal student loans have been in administrative toleration since March 2020 when Congress passed the CARES Act bailout package. During this time, payments have been suspended and there is no interest on government student loans.

The Biden government has issued several deferral extensions, the last of which came in December with the advent of the Omicron variant. However, the current renewal expires in April this year, which means federal student loan borrowers will have to resume payments in May.

The exact date that payments will resume will depend on when a borrower’s payment due date was prior to the pandemic. For example, a borrower who paid their student loan on the 15th of the month will have to resume their payments starting May 15th, 2022.

Borrowers unable to resume their payments in May risk defaulting on their student loans, which can lead to wages being foreclosed. If you need more time this spring to prepare for student loan repayment, consider applying for up to 36 months of additional government forbearance through a postponement of economic hardship or unemployment application.

You can also consider alternative debt settlement options, such as: B. refinancing into a private student loan at a lower interest rate to reduce your monthly payments. Remember, by refinancing your federal loan into a private loan, you will not be eligible for certain government benefits such as income-driven repayment plans (IDR), COVID-19 administrative tolerance, and some student loan allocation programs.

Visit Credible to view your valued student loan refinance offers without sacrificing your credit score.

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2. Many borrowers will have a new loan service provider

Several well-known student loan providers, including Navient, FedLoan Servicing, and Granite State Management & Resources, have exited the federal student loan market. Borrowers whose loans have been serviced by these institutions will automatically transfer their loans to a new service provider.

Borrowers whose loans have been transferred to a new student loan service provider should have already received email messages through the Financial Student Aid (FSA) office. The Biden government began notifying borrowers of student loan service transfer in November.

FSA email notifying the borrower of the transfer of the student loan service provider.

If your student loan service provider has changed, your loan terms – including the monthly payment, the payment due date, and the interest rate – will remain the same. However, if you are not happy with your current loan terms, you can consider refinancing while student loan refinance rates are near all-time lows.

Refinancing your student debt at a lower interest rate can reduce your monthly payments, pay off your debt faster, and save money over the life of the loan. Use Credible’s student loan refinance calculator to determine if this debt settlement plan is right for you.

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3. It may be easier to qualify for student loan approval

The Department of Education announced significant changes to several state student loan cancellation programs in 2021, allowing more borrowers to have their loans repaid in 2022 and beyond. One of the major revisions was the Public Service Loan Program (PSLF).

The PSLF program enables civil servants to pay the remainder of their state student debt after 120 consecutive qualifying payments. As part of the temporarily extended PSLF exemption, eligible borrowers who apply for the program can count more of their student loan payments against this balance.

The Biden administration estimates that the latest PSLF update will, on average, bring 550,000 borrowers about two years closer to canceling their student loan. Borrowers with Federal Family Education Loan (FFEL) program loans and Federal Perkins loans must be enrolled in the Direct Loan program by October 2022 to qualify.

If you have loans that are not eligible for student loan termination, such as B. private student loans, it may be advisable to refinance on better terms. Find out if you’re eligible for a lower student loan rate by pre-qualifying for free on Credible.

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