Editor’s Note: This story originally appeared on The Penny Hoarder.
The past year has been a period of upheaval in the student loan industry, including the fourth extension to freeze student loan payments.
Both service providers and borrowers alike saw the impact in 2021, ranging from changes to the FAFSA application to the exit of student loan service providers to a revision of the public student loan waiver program.
With all of the changes in the way of student loans, it can be difficult for borrowers to keep up with everything they need to know.
That is why we are here. We have compiled the most important information about student loans in 2022.
1. Payments run up again in May
The student loan disbursement is scheduled to start again on May 1, 2022.
In late December, President Joe Biden extended the student loan payment hiatus until April 2022. This was helpful for many borrowers who may have struggled to find steady work and pay off their debts during the ongoing pandemic.
The automatic student loan deferral program was part of the CARES Act, the COVID-19 relief package passed by Congress in March 2020.
With the Omicron variant circulating in late 2021, the extension will give borrowers more time to regroup while they try to recover from the financial impact of the pandemic.
According to a survey by the Student Debt Crisis Center, conducted before the latest break extension, 89% of full-time student loan borrowers said they were not financially secure enough to resume payments in February. You now have another 90 days.
With the renewal, borrowers may wish to use The Penny Hoarder’s advice to prepare for paying off their student loan debt.
2. Changes in the student loan service industry
The past year has been a busy one for the student loan industry. It affected approximately 15 million borrowers when student loan service providers like FedLoan, Granite State and Navient decided to pull out of the service business.
The timing could certainly have been better. With the ongoing payment hiatus, adding service changes only complicates the already difficult situation for servicers and borrowers when payments resume in May.
The logistics associated with moving millions of borrower accounts to new service providers will test the industry.
If you don’t know who your new servicer is, log into studentaid.gov and look for the “My Servicers” section. If you are unsure how to register, call the Bundesstudienhilfe information center at 1-800-433-3243.
3. Public Sector Loans Program
In the past, the federal forgiveness program has been plagued by poor communication and conflicting information from both service providers and the Department of Education.
However, the DOE announced in late 2021 that 550,000 borrowers will experience “accelerated forgiveness” as part of a loan waiver revision.
For tens of thousands, that meant automatic student loan issuance.
This is good news (fingers crossed) for borrowers who work in the public sector, are veterans, or have a qualifying disability. Spurred on by the pandemic, the DOE promised to make “transformational changes” to the program that would bring those hundreds of thousands of borrowers closer to forgiveness.
Will the DOE actually pull through? Stay tuned for 2022 and years to come.
4. Changes to the FAFSA application form
The FAFSA (short for Free Application for Federal Student Aid) is known to be difficult, confusing and lengthy. So it was good news for potential borrowers when the Federal Office for Student Funding announced upcoming changes to the form in 2021.
For 2022, however, these changes appear to be mostly cosmetic in nature.
The only significant changes will be that a drug abuse conviction or failure to register with the Selective Service System will no longer affect a prospective borrower’s ability to apply for financial assistance – even if those questions remain on the form in 2022.
The FAFSA form for the 2022-2023 school year is currently available with a federal grant application deadline of June 30, 2023. State FAFSA deadlines vary by state.
If you need help filling out the long form, see The Penny Hoarder’s step-by-step guide on how to fill out FAFSA.
5. Retirees will continue to grapple with student loan debt
Student loans are no longer just for traditional college-age children. At the end of 2020, borrowers aged 50 or older held approximately 22% of the country’s student debt, worth $ 1.6 trillion, the AARP reports.
That’s a surprising number, and it only points to the continued rise in the cost of public education over the past few decades. This money can be owed from their own schooling or from helping their children with their college education.
With that said, retirement seems out of reach for someone in their 50s or 60s who is still grappling with a lot of student loan debt. But there are options including:
- Avoid Federal Student Loan Refinancing.
- Lower federal payments with earnings-based repayment.
- Choose earnings-based repayment for Parent PLUS loans.
- Pay off as much of your personal loans as you can.
- Check out student loan forgiveness if you have a disability.
- Have a tough conversation with your children and ask them to contribute more.
Find out more about all of these ways you can retire with student loans.
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