A lot is happening with student loans. Paused payments will be resumed shortly. Some student loan servicers have changed. The Byden administration has expanded several student loan forgiveness programs, but authorities have begun to work on larger structural changes to major student loan programs. It can be difficult to catch up.
For now, student loan borrowers need to remember three important dates.
Student loan forgiveness memo by October 22, 2021?
Last week, 15 Democrats sent a letter to President Biden urging him to publish the long-awaited legal note on the executive branch to enact widespread student loan forgiveness.
In April, Biden instructed government officials to investigate and evaluate whether they had valid legal authority to cancel student loan debt on a large scale. Student loan borrowers and their ally parliamentary supporters have called on Biden to take enforcement action to cancel student loan debt of more than $ 50,000. The White House initially proposed that the resulting legal memorandum be published within a few weeks. But six months later, the administration says there was no renewal.
In their letter, House Democrats gave the Biden administration a deadline to publish a student loan forgiveness memo on October 22, 2021. Of course, they don’t have the power to force the White House to act, and the administration can simply ignore the request. However, the pressure to publish this information will only continue to increase, so keep an eye out for updates that day.
Student loan payment suspension will end on January 31, 2022
Most federal student loan payments have been suspended since March 2020 under the CARES Act. The law also frozen interest on default federal student loans and suspended collection. The bailout was initially set to last for 6 months, but has been extended several times. The Biden administration announced the final extension on January 31, 2022. In theory anything is possible, but the administration has made it fairly clear that there will be no further extension of the payment suspension beyond that date.
This means that millions of borrowers will resume repayment in February this year. And the resumption of payments is taking place during a significant turmoil in the Ministry of Education’s federal student loan service system. To prepare, the borrower must do the following well before the deadline:
- Please update your contact information, such as your mailing address, phone number, and email address, so that you can receive important communications.
- Save and keep important records such as payment history and important communications.
- Review the repayment plan and evaluate the payment amount when billing is resumed in February. If you cannot afford to make the expected payment, consider applying for another repayment plan or requesting a recalculation of the payment based on your income.
Expansion of public service loan forgiveness will end on October 31, 2022
Last week, the Ministry of Education announced a major change to the Public Service Loan Forgiveness (PSLF) program, which provides loan forgiveness to certain borrowers who have devoted their careers to non-profit or government work. The PSLF program has long suffered from disastrous approval rates due to complex eligibility criteria and inadequate oversight.
Under the newly announced “Limited PSLF Exemption” program, the Biden administration will extend the initial eligibility criteria for the PSLF program. Previously, PSLF was limited to certain types of federal student loans and specific repayment plans based on the borrower’s income. Only payments on time are counted, and depending on the particular circumstances of the borrower, loan consolidation may be absolutely necessary or can be a major mistake. The Limited PSLF exemption changes many of these rules, allowing far more borrowers to access the PSLF program and exempt student loans more quickly.
However, this program is temporary and will continue until October 31, 2022. Some of the changes to PSLF will be implemented automatically. For example, a direct loan payment rejected for technical reasons (not paid on time or penny-off) is corrected without any action on the part of the borrower. However, other borrowers, such as those who have an FFEL loan or who have repaid the loan directly under a non-qualified repayment plan, may take measures such as consolidation, PSLF application and / or employment certificate submission. Must be taken. Also, if action is required, it must be taken by October 31, 2022.
That’s enough time, and the Ministry of Education will publish more information on qualifications and application procedures in the coming weeks. Therefore, the borrower does not need to take immediate action. However, borrowers who may benefit from the PSLF expansion will definitely want to mark their calendar. In the meantime, the department has set up a website for extended programs.
Student Loan Borrowers: Expect These Four Things By January
Biden transforming public service loan forgiveness with huge new changes: important details
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