Federal Student Loans: What To Expect And How To Prepare For ...

Federal student loan payments will resume at the end of January 2022. The U.S. Department of Education has made it clear that this is the last COVID relief extension. This means borrowers should be ready to make their first payment in February.

Here are some things you can expect:

• Your student loan servicer will contact you about payments resuming.

• You will receive an invoice at least 21 days before your first payment is due.

• Your monthly payment due date should be the same you had prior to the COVID administrative forbearance.

• Your payment amount should be the same if you were enrolled in an Income Driven Repayment plan unless you renewed or changed your payment plan during the suspended period. If you were enrolled in a Standard, Graduated or Extended Repayment plan, your payment amount may be different. Contact your servicer for more information.

• Auto-debit payments should resume automatically.

• Your loans will start accumulating interest starting February 2022 and any accumulated interest should not be capitalized—i.e., added to your principal—unless you were in a traditional deferment or forbearance prior to the COVID relief .

• If your loans were in default, collection activities may resume.

• For more information on what to expect, click here.

Between now and February, here are some things you can do to prepare for student loan payment resumption:

• Update your contact information! Your loan servicer should have updated contact information. If you enrolled in electronic correspondence, make sure you are getting and reading your notices and letters. Servicers have started notifying borrowers about payments resuming. If you don’t know who your servicer is, log into your studentaid.gov account or call the Federal Student Aid Information Center at 800-433-3243 to find out.

• Enroll in the right repayment plan. If you will not be able to afford your payments when they resume, explore other plans, especially the Income Driven Repayment options. Allow yourself 6-8 weeks for a change in plans to go through. You can change repayment plans through your servicer or at studentaid.gov. Try to avoid getting non-COVID forbearances or deferments once payments resume.

• Recertify your Income Driven Repayment (IDR) plan. Your servicer will let you know in advance when you need to recertify. In general, recertification dates have been pushed back. But if your income has declined, recertifying your IDR plan may lower your payments once they resume. You can recertify at studentaid.gov or with your servicer.

• Check your credit report. It is always a good idea to check your credit report to make sure your student loans are being properly reported. You can get free credit reports at AnnualCreditReport.com. (Due to covid, free credit reports are available weekly until April 2022.)

• Get help if your loans are in default. Getting your student loans in good standing now will avoid collection fees, wage garnishments, and other benefit offsets later.

• Keep a copy of your student loan records. Download your records, including notices from your servicer and Federal Student Aid (studentaid.gov).

• Do not pay for student loan help! You should never have to pay to manage your student loans. Do not fall prey to organizations offering to get you student loan forgiveness or other “relief” available because of this pandemic. Contact your servicer, a non-profit like EDCAP, or a legal service agency for free help.

• Do not ignore your private student loans. If you have private student loans, contact your lender and explore possible options. If you stopped paying, get help first to determine the best course of action.

Remember that each situation is different. If you or someone you know is worried about paying your student loans and does not know what to do, our Education Debt Consumer Assistance Program (EDCAP) is providing over-the-phone and remote counseling services.

We are here to help and guide you. Our helpline is available at 888-614-5004 (M-F, 9 am – 4 pm), or you can email [email protected]. Visit our website at edcapny.org for more information about our free services.

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Economic Mobility & Security