3 Things You Need To Know Before The Student Loan Debt Payment Pause Ends

• President Joe Biden’s administration has extended the freeze on student loan debt repayment till early 2022.
• Borrowers should expect changes to their student loan repayments including a change of loan servicers.
• Borrowers should take advantage of these last months of the pause to clear out as much of their student debt as possible.

If you are worried about resuming student loan debt payment in October, you must have been glad when President Joe Biden’s administration extended the freeze on payments for an extra period of four months.

Biden’s administration extended the freeze to the end of January 2022, and officials have clarified that this is the final extension.

That means that approximately 42 million borrowers of student loans should therefore prepare to resume repayment in just a few months.

The pause on pause on student loan debt payment has been in place since March 2020.

If you are a borrower, there are three things you need to know before the payment freeze comes to an end.

1. The Date of the First Payment Bill

It is important to note that the most recent and final extension of Biden’s student loan debt payment freeze comes to an end on January 31, 2022. This means that, as a borrower, you should expect your first payment bill in February 2022.

One of the things you should take care of us to update your contact information with your loan servicer. Make sure such information as phone number, email address, residential addresses and mailing address are up-to-date. This will ensure that you receive all important communications from your servicer.

2. The Changes To The Student Loan Debt Repayment

Officials in the Biden administration are working on a new-look repayment for borrowers when the Student Loan Debt payment freeze comes to an end. According to a report by Politico, the administration is considering the introduction of a number of flexibilities aimed at helping you to transition easily into repayment. These include:

• Temporary freeze on late payment penalties: You might be offered a grace period of 90 days during which you will not be penalized for late repayments.
• Return to good standing: If you are in default of your federal loans, you could be automatically be brought back to good standings.
• Relaxed repayment plan requirements: If you are applying or seeking re-certification for income-driven plans, you might be required to meet more relaxed requirements. These include allowing you to apply over the phone with your loan servicer. Such measures are aimed at easing application backlogs.

It is worth noting that these flexibilities have not yet been finalised, but are under consideration. Meanwhile, you should contact your servicer for more details on the monthly payments that are expected to start in February 2022.

In addition, if you think your financial situation is worse than before the pandemic started, you may ask your loan servicer to recalculate your payments under an income-driven repayment plan.

Your might also look at this list of payday loan providers in case you would need them for your student loan repayment.

3. Your Loan Servicer Might Change

Major loan servicers have indicated that they will no longer be offering their services to the US Department of Education’s federal student loan system. Loan servicers are just contractors for the Department. Therefore, a change in a loan servicer will not affect the terms and conditions of your federal student loan. Neither does it affect your ability to access federal student loan programs in future.

Nevertheless, here is what you need to know about the change in student loan servicers:

• For borrowers who were being serviced by Navient, their loans will be transferred to a company referred to as Maximus.
• For those who were being serviced by FedLoan Servicing, their loans may be transferred to a new servicer which the Education Department has not yet given details on. There are reports of some loan accounts from this servicer being transferred to a company referred to as Mohela. However, it is not clear whether all FedLoan student loan accounts will be transferred to this servicer.
• For other Department of Education loan servicers such as Great Lakes and Nelnet have not indicated that they were withdrawing their services. As such, their contracts have been extended by the Department for two more years.

Student Loan Debt Payment: Final Thoughts

While you might be tempted to remain ‘on the break’ from your student loan debt repayment until the end of the pause, continuing to make your payment is a good idea. It will be even better if you paid more than your regular payment if you can afford it.

It is therefore advisable that you take advantage of these last months of the moratorium to clear out as much of that student debt as you can.

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