Student Loan Repayments Resume On August 31 2022 Heres What Students Need To Know To Be Prepared For The End Of The Student Loan Moratorium
Normally, student loan repayments are due every month for borrowers who have graduated and have passed the grace period. However, there has been a student loan repayment moratorium in place since the beginning of the COVID-19 pandemic.
At the start of COVID-19, the Department of Education paused all student loan repayments while also temporarily lowering the interest rate to 0%. This gave borrowers relief from their payments and helped to stimulate the U.S. economy.
Now the program is coming to a close, and many are wondering when do student loans resume?
How To Begin Making Payments
Starting in January 2023, youll need to start making student loan payments again. Anyone enrolled in auto-debit programs will see the payment auto-drafted from their bank account. Loan servicers will NOT automatically restart auto-debits, so you need to make sure you login and update your information correctly.Borrowers who made manual payments must start sending checks or making transfers through the loan servicers website. If you need more information about making manual payments, contact your loan servicer.
Recertifying Income When Student Loans Unpause
If youre on an IDR plan, youll eventually need to re-certify your income. Income re-certification dates have been pushed to some time in 2023. Your loan servicer should send you information about your re-certification date.
You can also self-certify your income for this year only. You can do that by going to StudentAid.gov.
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Biden Official Says Payments Will Resume At Some Point’
The Biden administration is being vague about the resumption of student loan payments once the current pause ends on Aug. 31.
Though the latest pause in student loan payments is currently slated to expire at the end of August, President Joe Bidens administration has remained vague on when payments will once again resume.
The CARES Act, signed into law in March 2020, provided economic relief amid the surge of COVID-19 and subsequently paused student loan payments and interest rate accruals for six months until September of that year. Biden extended it further when he took office, and to date there have been a total of six pauses in payments.
Education Secretary Miguel Cardona stated during a recent interview on MSNBC that “At some point, people are going to have to start paying what they can afford to pay” on their student loans. However, he declined to comment on whether student loan payments would restart in September, saying department officials are conferring with the White House about when to restart payments. He said borrowers would get “a long on-ramp with clear information” before payments restart.
What Else Can I Do To Get Ready For Repayment
Here are some other tips for getting prepared for repayment to begin after January 31, 2022:
- Learn about all the ways you can make a student loan payment.
- Download the Great Lakes Mobile app for another handy way to manage your loans.
- Follow us on social media .
- Check out our Knowledge Center for informative articles about federal student loans.
Great Lakes’ goal is to provide you with the best service possible. We’re in this together.
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Biden Officials Suggested That Another Extension Of The Student Loan Pause Is A Real Possibility
Statements made by top Biden officials in the last week clearly indicate that the administration does not necessarily view the August 31 extension as the final one.
In response to a press question about whether the President would extend the relief again beyond August 31, White House Press Secretary Jen Psaki told reporters last week the Biden administration would continue to assess key financial metrics including costs and inflation. She said, The Department of Education will look at that and a range of factors as we get closer to August.
Similarly, Secretary of Education Miguel Cardona said in an interview last week in regards to a further extension, Were going to continue to monitor it. Right now, we have August 31 and as youve seen in the past, weve been comfortable moving that date if needed.
Should I Pay Off My Loans In A Lump Sum
While many people have struggled over the last several months, some have managed to increase their savings and income. If you have enough money to pay off your loans, you may want to get rid of them now. You can schedule a payment to pay off the loans in full to start 2023 on the right foot.If you dont have enough money to pay off your loans in a lump sum, it may be advisable to wait on extra payments. The economy is still shaky and it could be risky to deplete savings to get rid of debt that has a manageable interest rate. Consider waiting until you can pay off the debt in full before tacking on big extra payments.
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I’ve Been Making Payments During The Pause Can I Continue To Do So
Absolutely. Continuing to make payments during the payment pause could help you pay down your loan balance more quickly. The full amount of apayment will be applied to your principal balance once you’ve paid all interest that accrued beforeMarch 13, 2020. There is no penalty for paying less than your regular monthly payment amount during the payment pause.
Student Loans During The Great Recession
Between December 2007 and June 2009, the U.S. experienced one of its longest economic downturns, known as the Great Recession, which peaked in 2008. During that time, many adults flocked back to college in hopes that a newly minted degree would be the path to a better job.
But there was one problem: Many of these adults enrolled at two-year for-profit colleges, which tend to have higher price tag than four-year public institutions. This means that they graduated college with substantially more debt than their peers who attended public institutions and who graduated a year or two before the Great Recession.
This, combined with fewer job opportunities and a lack of flexible student loan repayment options, caused student loan default rates to increase by as much as 17 percentage points between late 2006 and 2009, according to the Urban Institute.
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When Do Student Loans Unpause
While the world is still far from normal, the Department of Education will end the coronavirus forbearance period on December 31, 2022. That means payments on federal student loans will begin as soon as September 1, 2022.If you have auto-debit set up for your student loans, the Department of Education has removed all pre-existing auto-debit setups. As such, you will need to reset your information and accounts so that your payment is automatically debited. Check with your loan servicer for more.
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Federal Student Loan Deferment Is Set To End On Aug 31 And Interest Will Start Accruing Again Heres What You Need To Know Before Your Payments Resume
Federal student loan payments have been paused since March 2020, but theyre set to resume on Sept. 1. Will President Biden extend the federal loan moratorium?
Federal student loan payments have been on hold since March 2020 as a result of the COVID-19 pandemic. The government also sent the interest rate for federal student loans to 0% during the pause. The payment pause only applies to borrowers with federal student loans.
Payments were supposed to resume in April 2022, but President Joe Biden extended the student loan deferment again until Aug. 31. Assuming the deferment isnt extended further, this will be the first time some federal borrowers have made payments on their federal loans in more than two years.
Federal student loan borrowers will also begin making interest payments once their regular loan payments resume. Unless you consolidated your federal loans during the deferment period, when your payments resume your interest rate will be the same as it was before the deferment period.You might consider refinancing your student loans after the payment pause ends. By visiting Credible, you can learn more about student loan refinancing and compare rates from multiple private student loan lenders.
Be Aware Of Recent Changes To Public Service Loan Forgiveness Affecting Eligibility And Changes Affecting Income
Good news! WashU employees may be eligible for loan forgiveness based on the recently announced Limited PSLF Waiver that expires on . The Waiver has expanded eligibility for purposes of loan forgiveness under the PSLF and those who previously were ineligible for loan forgiveness may now qualify. In fact, this will affect approximately 40,000 additional borrowers nationwide who will now be eligible for immediate and automatic forgiveness!
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When Do Student Loan Repayments Resume
- 16:49 ET, Aug 24 2022
THE moratorium on student loan repayments will expire on December 31, 2022 after more than two years of paused payments.
After periodically extending the freeze, the White House indicated that no more pauses are coming after this year.
That means student loan repayments will begin again on January 1, 2023.
The first federal student loan deferment was established through the CARES Act.
The CARES Act was a stimulus bill passed by Congress and signed into law by former President Donald Trump on March 27, 2020, in response to the Covid19 pandemic.
Most recently President Joe Biden extended the pause on August 24, this time until December 31.
Determining Your Loan Servicer
Loan servicers are the companies that manage loans and accept payments from borrowers. For private loans, the servicer is usually the company you applied with originally. For federal loans, this will be a private company like FedLoan, Great Lakes, or Nelnet.
The loan servicer is the company you will make payments to and where you’ll direct any questions you might have.
To find out who your loan servicer is, you can log into and check your dashboard on StudentAid.gov, then scroll down to the My Loan Servicers section. You can also call the Federal Student Aid Information Center at 1-800-433-3243.
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The Economy Could Be In Trouble
Administration officials have repeatedly said that they would consider economic factors when deciding whether to issue another extension of the student loan payment pause.
The U.S. economy is currently under pressure, with inflation still at a four-decade high and new signs the country could be in for a recession. Interest rates are rising and regardless of whether were technically in a recession or not, many Americans hold the view that the economy is in trouble. This could play into the administrations decision on whether to extend the pause or not in the near term, experts say.
Excessive inflation has increased prices for almost everything and most borrowers are likely not in a position to pay off their loans, says Tony Aguilar, founder and CEO of Chipper, a student loan repayment app. An additional extension also provides the White House with more time to review potential forgiveness plans.
I’m In The Public Service Loan Forgiveness Program Will My Suspended Payments Count Toward Pslf
Yes, paused payments count toward PSLF as long as you meet all otherqualifications. You will receive credit as though you made on-time monthly payments in the correct amount whileon a qualifying repayment plan. Borrowers may receive credit toward PSLF during the payment pause if they laterenter the PSLF program. For more information, review the COVID-19Public Service Loan Forgiveness page on Federal Student Aid’s website. We also encourage you to learn more about thelimited PSLF waiver, which ends October 31, 2022.
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How Can I Find Out My Payment Amount And Due Date
You can find the due date for your first student loan payment by contacting your student loan servicer. Ask the representative the following questions:
- When will my first payment be due?
- What repayment plan am I in?
- What will my payment amount be?
- When can I sign up for autopay?
* Youâll need this information to claim the interest deduction on your tax return.
Will The Cares Act Be Extended
Many borrowers may be wondering if the federal student loan deferment will be extended beyond Aug. 31. No one knows for sure at this point, but it does seem possible President Biden has already extended the deferment four times during his presidency.
U.S. Secretary of Education Miguel Cardona has indicated that another extension is possible.
“I dont have any information now to share with you about when it would end or what the conversations are about when its going to be lifted,” he told a Senate subcommittee in June.
“I know we have a date, and it could be that its extended. Or it could be that it starts there. But what I will say is that our borrowers will have ample notice.”
President Biden has also received pressure from activist groups and top Democrats to extend the student loan deferment and provide more meaningful debt cancellation. So a CARES Act extension seems to be on the table, but its unclear whether or not it will happen.
In the meantime, federal borrowers should assume that their student loan payments will resume on Sept. 1 until they learn otherwise. To get started on refinancing your student loans, visit Credible and compare prequalified rates from multiple lenders.
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When Will Student Loan Payments Resume
At the present moment, the US government expects the repayment plan for student loans to restart on August 31 2022, which is when the moratorium on such payments is due to expire.
With only 150 days set to come before this deadline, there is plenty of time for members of the public to get their finances in order and set aside money to repay.
Those with outstanding student loans are understood to owe the federal government a collection 1.6 trillion dollars, according to figures published by CNBC.
More extensions are, according to the government, unlikely, so it would be unwise for people to plan for further extensions at this juncture.
Current State Of Student Loans
Americans collectively owe a staggering $1.6 trillion in federal student loans and counting. The Department of Education estimates that the average undergraduate student leaves school with $25,000 in student loans, and its a problem thats affecting more than 45 million people from all walks of life.
In an effort to tackle the current student debt crisis, President Joe Biden recently unveiled a three-part student debt relief plan, which includes one-time student loan cancellation. Under this plan, borrowers earning less than $125,000 a year could see their federal student loan balances decrease by as much as $20,000, depending on whether they received the Pell Grant.
Kristin Blagg, senior research associate at the Urban Institute, says that this plan could be a key driver in avoiding another student loan default wave like the one we had in 2008 should we enter a new recession.
Those who borrow small amounts of student debt $10,000 or less are more likely to struggle with delinquency and default, because this sometimes indicates that the borrower may not have completed the degree or certificate that they were pursuing, Blagg says. These low-balance borrowers are likely more vulnerable during a recession. If these borrowers have their loans forgiven, they will no longer be in the student borrower pool, potentially reducing the share of borrowers who drop out of current repayment due to financial difficulties in a recession.
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Which Groups Will The End Of Deferment Hurt The Most
When the pause on student loan payments and interest finally comes to an end, anyone with a higher-than-average debt burden will naturally have a greater financial challenge ahead of them than those with less college debt. As such, the following three groups are particularly at risk once the current student debt deferment period comes to an end:
Student Loan Servicers Were Told To Hold Off
The Education Department reportedly told student loan servicers this week to not send out billing notices to borrowers a sign it does not plan to ask borrowers to resume payments in the near future.
Because the student loan payment freeze was enacted under the CARES Act, loan servicers are required to give upward of six notices starting at least two months before payments are set to resume. The start of July was the two-month mark for the Aug. 31 deadline, but borrowers have yet to receive any information about the restart of repayment.
This suggests that the student loan payment pause and interest waiver will be extended, as there just wont be enough time to prep borrowers to resume making student loan payments, Kantrowitz says.
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