Will My Federal Student Loan Payment Change in 2022?

Will My Federal Student Loan Payment Change in 2023?



Thanks to the new federal student loan forgiveness plan announced by President Joe Biden, borrowers who earn $125,000 or less a year ($250,000 for married couples) will be eligible for $10,000 in federal student loan cancellation. Those who received federal Pell Grants, which are awarded to undergraduate students who have exceptional financial need, will be eligible for the cancellation of up to $20,000 of debt.

The Biden administration also extended the pause on federal student loan repayment through December 31, 2022.

If you are one of those who is eligible for federal student loan debt cancellation, how will your student loan payment change once the pause ends?

Here’s what you need to know.

What Your New Payment Might Look Like

Federal student loan payments will be recalculated, though the specifics have not yet been released. An important thing to note, however, is that the Biden administration has proposed creating a new repayment plan that caps payments at 5% of a person’s monthly income, down from 10%. That could reduce bills for millions of borrowers.

Until more information is released, you may be able to get a sense of what your new payment might be by using our student loan calculator. For instance, if your student loan debt went from $28,950 (the average amount owed by undergraduates) to $18,950 after the $10,000 federal student loan forgiveness, and your interest rate is 3.73%, your payment would be approximately $163.80 a month, assuming the standard federal student loan repayment term of 10 years. Keep in mind that this is just an example. More specifics and further details about the plan are expected to be released in the coming weeks.

It’s important to be prepared for the end of federal student loan relief. Staying tuned to the latest developments on the student loan front will help, too. We will continue to update the information as it becomes available to help you do that.

What if I Made Payments During the Pause?


As of March 2021, only 500,000 Direct Loan borrowers, among all 42.9 million federal student loan holders, had continued making payments during the federal student loan payment holiday, which began on March 13, 2020.

For them, the question is: Will my student loan payment be smaller because I made payments during the pause?

No. The monthly payment amount will not be reduced just because you made payments during the pause, said Scott Buchanan, executive director of the Student Loan Servicing Alliance. However, such payments are expected to reduce the number of months or years required to pay off the loan.

During the payment and interest holiday, the full amount of any federal student loan payment made was to be applied to the principal balance, once any interest that had accrued before March 13, 2020, was paid.

What to Do if You Have a New Loan Servicer


To find out the length of your loan and get any other answers, contact your loan servicer. It’s possible you will have a different company to deal with than you had before the pause.

Millions of borrowers, for example, are to send their federal student loan payments to new loan servicers as FedLoan Servicing, Navient, and Granite State cease their contracts.

Buchanan said the automatic transitions are going smoothly.

If you have any uncertainties about your loan, contact the company, Buchanan said. Waiting until January is not the best idea, since a lot of people will be seeking answers.

The first place to try is your loan servicer . But if you’re not sure who that is, call 800-433-3243.

The Latest on Student Loan Refinancing


During the long forbearance, the government not only deferred payments but waived interest on federal student loans. At the same time, interest rates on refinanced loans with private lenders remained near historic lows (they have since started to rise).

For some people, this is creating an interesting choice.

Student loan refinancing can decrease monthly payments, depending on the terms of the loan. By refinancing federal student loans, though, borrowers forgo the federal student loan forgiveness programs and income-driven repayment plans.

The Takeaway

The new federal loan forgiveness plan cancels $10,000 in federal student loan debt for individuals earning $125,000 or less a year ($250,000 for married couples) and up to $20,000 for those with Pell Grants. Additionally, people with undergraduate loans would be able to cap their payments at 5% of their monthly income. Federal student loan repayments will be recalculated, but specific information has not yet been released.

With student loan refinancing, you can look for a lower interest rate for what remains of your federal student loan debt after federal student loan forgiveness. With interest rates on the rise, this could be a good time to explore your options to find out what makes sense for you. However, refinancing does mean losing access to federal programs, including the payment pause that has been extended through the end of the year.

Check for a lower interest rate on refinancing.

Learn More

Photo credit: iStock/Prostock-Studio


SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended to December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since in doing so you will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave up to $10,000 and $20,000 for Pell Grant recipients unrefinanced to receive your federal benefit. CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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