3 Student Loan Changes in 2022 Borrowers Should Know About

The new year brings a series of changes for student borrowers, including the return to federal student loan repayment. (iStock)

The student loan industry has seen significant reforms over the past few years during the coronavirus pandemic, and many of these changes will impact borrowers in 2022. Here are some changes that student borrowers should be aware of over the next year :

  1. Payments (and interest charges) restart in May
  2. Many borrowers will have a new loan manager
  3. It may be easier to qualify for student loan forgiveness

Keep reading to learn more about what to expect with 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.

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1. Payments (and interest charges) restart in May

Federal student loans have been on administrative forbearance since March 2020, when Congress passed the CARES Act relief package. During this time, payments have been suspended and interest is not accrued on student loans held by the government.

The Biden administration has issued several forbearance extensions, the latest of which came in December amid the emergence of the omicron variant. But the current extension expires in April, which means federal student loan borrowers will have to start making payments again in May.

The exact date payments will resume will depend on when a borrower was due for payment before the pandemic. For example, a borrower who paid their student loans on the 15th of the month will have to start payments again from May 15, 2022.

Borrowers who are unable to resume payments in May are at risk of becoming delinquent on their student loans, which can lead to wage garnishment. If you need more time to prepare for student loan repayment this spring, consider applying for up to 36 months of additional federal forbearance through an economic hardship or unemployment deferment application.

You can also consider your alternative debt repayment options, such as refinancing a private student loan at a lower interest rate to lower your monthly payments. Keep in mind that refinancing your federal loans into a private loan will make you ineligible for certain government benefits such as income-contingent repayment (IDR) plans, COVID-19 administrative forbearance, and certain cancellation programs. student loan.

Visit Credible to see your estimated student loan refinance offers without affecting your credit score.

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2. Many borrowers will have a new loan manager

Several important Student loan servicers including Navient, FedLoan Servicing and Granite State Management & Resources have exited the federal student loan servicing market. Borrowers whose loans were managed by these institutions will have their loans automatically transferred to a new manager.

Borrowers whose loans have been transferred to a new student loan servicer should have already received email communications through the Office of Student Financial Aid (FSA). The Biden administration began notifying borrowers of student loan service transfers in November.

Email from the FSA notifying the borrower of the student loan service transfer.

If your student loan officer has changed, your loan terms — including monthly payment, payment due date, and interest rate — will remain the same. But if you’re unhappy with your current loan terms, you may want to consider refinancing as student loan refinance rates are near all-time lows.

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

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

The Department of Education announced significant changes to several federal student loan forgiveness programs in 2021, which will make more borrowers eligible to have their loans forgiven in 2022 and beyond. One of the most radical revisions was that of the Public Service Loan Cancellation Program (PSLF).

The PSLF program allows public servants to repay the remainder of their federal student debt after making 120 consecutive qualifying payments. Under the PSLF’s extended temporary waiver, eligible borrowers who apply for the program will be able to count a larger portion of their student loan payments against this balance.

The Biden administration estimates the recent PSLF update will bring 550,000 borrowers about two years closer to student loan forgiveness, on average. Borrowers with Federal Family Education Lending Program (FFEL) loans and Federal Perkins Loans will need to consolidate into the Direct Lending Program by October 2022 to be eligible.

If you have loans that are not eligible for student loan forgiveness, such as private student loans, it may be a good idea to refinance on better terms. See if you qualify for a lower interest rate on student loans by prequalifying for free on Credible.

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