December 2021
Five Things Borrowers Need to Know About Repayment Resuming on Federal Student Loans
In response to the COVID-19 pandemic, the federal government paused student loan payments and set interest rates to 0% for all eligible federal student loans. Payments were scheduled to restart as of January 31, 2022 but on December 22, 2021, President Biden announced repayment restart has been delayed until May 1, 2022. On May 1, the temporary pause will end and federal student loan repayment and accrual of interest will resume.
Here are five things we want borrowers to know:
|
|
1. Update your contact information with your federal loan servicer.
Federal Student Aid hires loan servicers who are responsible for collecting federal student loans. Update your contact information with both your current loan servicer and with Federal Student Aid. This is especially important if your servicer has recently changed. If you don’t know who your current loan servicer is, go to StudentAid.gov and login in with your FSA ID (username and password). On the dashboard, find “My Loan Servicers” and select “View Servicer Details.”
Here is a list of the websites of the loan servicers currently servicing federal student loans. Once you have confirmed your servicer, you can log in to your loan servicer’s website or mobile app to make sure your contact information is current.
|
|
2. Know what you owe.
If you have not received an email or letter from your servicer, contact them to confirm your student loan payment amount. Your loan servicer is your source for official, up-to-date information about your loan. If you are unable to afford your current payment, there are a variety of Income-Driven Repayment (IDR) plans that calculate your monthly payment based on your income. Monthly payments may be as low as $0 per month. Check out StudentAid.gov’s Loan Simulator to identify the options that meet your needs and goals.
You can also contact your loan servicer to discuss additional deferment or forbearance options after the payment suspension ends on May 1, 2022. A deferment or forbearance will pause your payments for a longer period of time, but interest may be charged. For more information go to StudentAid.gov.
|
|
3. Work toward getting your financial house in order.
Start setting aside your monthly payment ASAP to establish a repayment habit before repayment restarts. This will help you adjust your budget, if necessary. Before repayment resumes, it may also be helpful to pay off debt and/or scale back on holiday spending. Use FAME’s free online financial wellness tool at FAME.Enrich.org for more information on budgeting and saving techniques. The more prepared you are, the smoother the transition will be.
If you are having difficulty making your payments, reach out to your servicer early to see what your options are. We are predicting loan servicers will be very busy when repayment restarts so connecting with your servicer as soon as possible will ease the transition.
|
|
4. Public Service Loan Forgiveness – Temporary Changes.
On Oct. 6, 2021, the U.S. Department of Education announced a change to the Public Service Loan Forgiveness (PSLF) program rules. For a limited period of time, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF.
If your student loans or payments did not previously qualify for Public Service Loan Forgiveness due to one of the following, you have until October 31, 2022 to take action so that payments made will count towards forgiveness:
- your loans were in the FFEL and Perkins Loans programs;
- your loans were not in a qualifying (Income-Driven Repayment Plan) Payment Plan; and/or
-
your payments were late or inaccurate.
For more information click here. To find out if you qualify for PSLF and what steps to take use the PSLF Tool at StudentAid.Gov/PSLF.
|
|
5. Avoid Student Loan- and COVID-19 Related Scams!
Beware of student loan scams! Your loan servicer will not call you to make you an offer about your monthly loan repayment, charge you to move your loans to a new servicer, or cold-call you to discuss your loans. There is NO FEE for the pause on repayment, or the 0% interest period—not from the federal government and not from your loan servicer. If someone asks for money for either of those reasons, it is a scam. Your loan servicer can provide free help with your student loans. There is no COVID-19-related loan forgiveness for federal student loans. If it sounds too good to be true, it probably is. Learn more about avoiding student loan scams.
|
|
For more information check out the recording of our recent webinar: |
For many student loan borrowers, payments have been on hold for 18 months. Loans are now scheduled to go back into repayment in May and it’s crucial that borrowers know their options and what they can do now to make restarting repayment as smooth as possible. Also, some loan servicers will no longer be servicing federal student loans. We’ll go over upcoming changes to help borrowers get prepared to start repayment as well as servicer changes and repayment options. We'll also review TEMPORARY changes to Public Service Loan Forgiveness programs and what borrowers need to do to take advantage of them. This webinar was recorded before President Biden’s announcement that repayment restart has been delayed until May 1, 2022. The information remains accurate except for the change in the restart date.
|
|
For additional helpful information and resources, find previous tips on our website.
FAME's College Access and Financial Education Team:
Mary Dyer, Financial Education Programs Manager
|
|
The Finance Authority of Maine (FAME) does not discriminate in the administration of any of its programs or in its employment practices on the basis of race, color, national origin, age, gender, religion, physical or mental disability, political affiliation, marital status or sexual orientation. FAME is an equal opportunity employer, provider and lender.
FAME provides links to other websites as a convenience and does not endorse or guarantee the content, accuracy or usability of such sites.
|
|
|
|
|
|
|
