If you have federal student loans, you may be overwhelmed and confused by the barrage of announcements and information coming your way.
Will your loans be cancelled? Will the repayment pause be extended beyond August 31? What about expanded benefits for those enrolled in income-driven repayment or Public Service Loan Forgiveness? What’s this about a “fresh start” if you were in default?
Below, we outline what we know, what we don’t, and some trusted resources to turn to if you have more questions or need help.
What’s happening with the repayment pause?
In April 2022, the White House announced another extension of the emergency pause on federal student loan payments, interest, and collections. This pause began in March 2020 in response to the COVID-19 emergency.
The current pause is set to expire on September 1, 2022 (with the pause on collections via the Treasury Offset Program set to expire six months later), but the administration has signaled it may further extend it. Top Democratic lawmakers have called on the White House to extend the pause at least through the end of 2022.
In the past, the administration waited to extend the pause until close to the deadline, leaving many borrowers confused and anxious about whether they’d need to start repaying again. The White House has also said that it’s considering various proposals to provide some amount of broad-based debt cancellation for federal student loan borrowers but has not yet announced any decisions.
While we don’t yet know what the White House will decide, there are some steps you can take to protect yourself.
Confirm who your servicer is and make sure your contact information is up to date
You can check on the status of your loan, confirm who your servicer is, and update your contact information by logging in to your StudentAid.gov account.
Enroll or re-enroll in a more affordable repayment plan
If you’re not sure which repayment plan you should be enrolled in, use the Federal Student Aid Loan Simulator to explore your options. If you’re concerned about being able to afford your payments, you can enroll in an income-driven repayment (IDR) plan, which can be more affordable since it bases your monthly payment amount on a percentage of your income.
If you’re already enrolled in an IDR plan, you don’t have to worry about re-certifying your income before the pause ends, regardless of whether your recertification date would have happened prior to that date. As part of the repayment pause, your recertification date has been pushed out from your original recertification date. You will be notified of your new recertification date before it is time to recertify.
If you’re currently on IDR plan and your income has changed significantly, you can update your information and get a new payment amount based on your current income. To do so, visit StudentAid.gov/IDR, click on “Apply Now,” and then start the application by clicking on the button next to “Recalculate My Monthly Payment.” After the repayment pause ends, your monthly payments will resume at this new amount.
If you would like to enroll in an IDR plan for the first time, visit StudentAid.gov/IDR, click on “Apply Now,” and then start the application.
Check whether you’re enrolled in automatic payments
If you were enrolled in automatic payments before the pause but haven’t adjusted your account since, your payments will not resume automatically unless you opt back in.
However, if you signed up for auto-debit during the repayment pause or opted out of the pause and have been paying your loans on auto-debit, you will continue to be enrolled and don’t need to take any further action.
For more details and resources on the repayment pause, you can visit the Education Department’s official page — which is the most reliable and frequently updated source of information — here.
I saw student loan interest rates went up. How will this affect me?
Each year, interest rates for federal student loans change based on a formula set by Congress. The rates are for new Direct Loans being made for the upcoming award year, which runs from July 1 to the following June 30. All Direct Loans have a fixed interest rate for the life of the loan.
If you already have loans, the announcement doesn’t affect your rate. It only affects those looking to take out new loans.
More information on student loan interest rates is available here.
I heard there are programs where some borrowers are getting closer to forgiveness. Do I qualify?
In October 2021 and April 2022, the Education Department (ED) announced two temporary programs to bring many borrowers closer to loan forgiveness via either income-driven repayment (IDR) or Public Service Loan Forgiveness (PSLF).
Public Service Loan Forgiveness Waiver
The first program, announced in October 2021, is the temporary “Public Service Loan Forgiveness (PSLF) Waiver.” This waiver allows you to receive credit toward PSLF for payments that otherwise wouldn’t have qualified.
Under the new temporary rules, any prior period of repayment counts as a qualifying payment, regardless of loan program, repayment plan, or whether the payment was made in full or on time. Employment qualifications have not changed.
The Education Department has a detailed Q&A here.
This program is currently set to expire on November 1, 2022. Some are calling on ED to extend the deadline.
Adjustments for Borrowers in Income-Driven Repayment
In April 2022, the Education Department announced an additional program to bring borrowers closer to forgiveness under income-driven repayment (IDR) plans.
For context, when you’re enrolled in an IDR plan, if you make 20-25 years (depending on the plan) of qualifying payments and still have a remaining balance, the rest of that balance is forgiven. However, ED found that many borrowers over time had been given bad information by loan servicers and so may have missed out on making qualifying payments that could’ve gotten them more quickly to forgiveness.
To address this, ED is making a one-time adjustment for many borrowers and counting payments toward forgiveness that were previously not counted. More details on which payments qualify are here.
According to ED, these adjustments will show up on your account starting in fall 2022.
I read that more than 200,000 borrowers are having all their student debt forgiven. Am I one of them?
On June 22, 2022, a group of defrauded student borrowers reached a settlement under which the Education Department will immediately discharge the debt of approximately 200,000 borrowers who attended certain colleges.
These discharges are being made under the “borrower defense to repayment” rule, which relieves students from repaying their federal student loans if the loans were taken out as a result of a school’s fraudulent, misleading, or illegal acts.
You are one of these borrowers if you submitted a borrower defense application related to any of the schools on this list. If you qualify, your entire loan balance will be automatically discharged, and you will receive a refund on any payments you made on the debt. You will also have any credit reporting related to this debt removed.
Another group of borrowers (approximately 64,000 people) who submitted applications will not be receiving automatic discharge but will instead be receiving a decision on their application using a “‘streamlined’ process that is favorable to borrowers,” according to the Project on Predatory Student Lending. All of these borrowers’ loans will remain in forbearance (or stopped collection status) with no interest until they either receive settlement relief or a final, appealable denial.
More details on this settlement are available here and here.
I was in default on my loans before the repayment pause but I heard my loans will be put back into good standing. What do I need to know?
In April 2022, as part of its announcement extending the repayment pause, ED also said that it will be “allowing all borrowers with paused loans to receive a ‘fresh start’ on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing.”
ED has not given more details since this announcement.
- Federal Student Aid Coronavirus and Forbearance Info for Students, Borrowers, & Parents (government website)
- U.S. Department of Education Help Center (government website)
- The Institute of Student Loan Advisors (trusted nonprofit website)
- National Consumer Law Center Student Loan Borrower Assistance Project (trusted nonprofit website)
- Project on Predatory Student Lending (trusted nonprofit website)
- National Foundation for Credit Counseling Certified Student Loan Counseling (trusted nonprofit website)