Student Loan Payments to Resume in 2022
Millions of People to Start Paying Student Loans Again
Editor’s Note: The Biden administration extended the pause on federal student loan repayment through May 1, 2022.
Despite pushes by some politicians, the moratorium on student loan payments looks set to expire at the end of January.
That means millions of federal student loan holders will have to resume making monthly payments beginning on February 1. For many, this will be their first student-loan related payment in nearly two years. As of the fall, over 42 million Americans had a federal student loan for a combined $1.6 trillion in debt. Over 36 million of those borrowers had a direct loan with the government. It appears that interest rates on these loans will reset from zero to the rate prior to the pandemic.
Help Is Available
To prevent sticker shock when borrowers receive their first federal student loan bill, it’s important to find out how much is owed, the interest rate, terms, and monthly payment. This information will help borrowers factor resumed payments into their monthly budget. If it’s unaffordable, debt holders have to reduce their expenses or seek help. If the full amount due isn’t paid on time—even once—the loan will be considered delinquent and late fees may be charged. If you can’t make your payments, contact your loan servicer immediately for help.
With federal loans, you can change your repayment plan at any time. If you are interested in switching the plan you are enrolled in, the Federal Student Aid website offers a repayment calculator that could help give you an idea of what your monthly payments may be like under each of the different payment plans.
Loan Servicers Changing
About 16 million people with federal student loans will see their loan servicer change in 2022. The federal government recently ended its contract with three loan servicers including Navient, resulting in the change.
Borrowers should receive information from their new servicer but should also make a record of their loan information from their previous servicer. That will enable borrowers to spot any errors if they arise.
Some borrowers may be holding out hope the government will add another extension, but that does not appear likely. As a result, student loan holders need to plan and prepare for the extra monthly payment next year.
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