Most federal student loan borrowers have not had to make payments on their loans for more than 18 months due to the ongoing national payment hiatus. At the beginning of the year, President Biden again extended the payment break until January 31, 2022. The Biden administration has described this as the last extension of the payment moratorium for student loans. That means millions of borrowers will have to resume repayments by February.
Many student loan borrowers use autopay programs (also known as automatic debits), which automatically debit student loan payments from their checking accounts each month. This can simplify repayment management, reduce the risk of accidentally missing a payment and incurring late fees, and can even result in a small rate cut. However, if you paid off your student loans using autopay or auto-debit before the student loan payment hiatus came into effect last year, don’t assume that your autopay payment will automatically resume in February or that everything will go smoothly.
Changes in student loan servicing occur at the end of the payment pause
The Department of Education is grappling with major changes to its student loan processing system as borrowers near the end of the national student loan payment hiatus. Three major student loan providers – Navient, FedLoan Servicing, and Granite State Management & Resources – have all recently announced they are leaving the department’s state loan management system. As a result, millions of borrower accounts will have to be transferred to new loan service providers in the coming months.
Borrowers who set up automatic payments before the payment break and then transferred their accounts to a credit service provider must re-establish an autopay agreement with the new service provider after the transfer. Your autopay information and authorization will not be transferred to the new servicer.
Borrowers should ensure that their contact information – including mailing address, phone number, and email address – is up to date as the Department of Education will notify borrowers of service changes in the coming months.
Autopay student loan confirmation
Even if your student loan servicer does not change, you may need to review your autopay agreement with your current servicer and possibly renew or reconfirm it. For example, Navient posted the following message on its website: “Auto Pay Confirmation Required – For borrowers with Department of Education loans who are in COVID-19 payment suspension, act now if signed in to Auto Pay Make sure your Auto Pay payments are resumed after the COVID-19 payment suspension ends. Sign in below to sign in or out of your Auto Pay registration. ”
If you are unsure whether your Autopay payment will start again in February, you can contact your credit service provider for more information.
Change student loan payments before resuming Autopay
Still, if your Autopay payment resumes in February and you don’t have to worry about loan processing changes, it might still be a good idea to check with your loan administrator about your monthly payments to make sure you can afford them be able.
For borrowers who have had an income-based repayment plan, your payments will likely be based on your most recent income recertification. That could be the end of 2019 if you haven’t certified your income again since then. If your income or financial circumstances have worsened since then, you should request a recalculation of your monthly earnings-related payment based on these changed circumstances before payments resume in February. Otherwise, a significant payment may be automatically debited from your bank account.
For borrowers who did not have an income-driven plan when the payment hiatus began, but whose financial situation has worsened since March 2020 (when the payment hiatus first came into effect), consider alternative repayment schedule options, including income-driven repayment schedules, before the automatic payments resume be included.
And remember – borrowers can opt out of automatic payment and make their payments manually each month.
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