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3 student loan changes in 2022 that borrowers should know about

3 student loan changes in 2022 that borrowers should know about
Written by Publishing Team

The new year brings a slew of changes for student loan borrowers, including the return to paying off a federal student loan. (iStock)

The student loan industry has undergone major reforms over the past few years during the coronavirus pandemic, and many of these changes will affect borrowers in 2022. Here are some of the changes that student loan borrowers should be aware of in the coming year:

  1. Payments (and interest charges) begin in May
  2. Many borrowers will get a new loan service
  3. It may be easier to qualify for student loan forgiveness

Keep reading to learn more about what’s in store for your student loan debt in 2022, and consider alternative student loan repayment options like refinancing. You can compare student loan refinancing rates on Credible to determine if this debt relief strategy is right for your financial situation.

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1. Payments (and interest charges) start in May

Federal student loans have been in administrative hold since March 2020, when Congress passed the CARES Act relief package. During this time, payments are paused and interest on student loans held by the government does not accrue.

The Biden administration has issued several extensions of patience, most recently in December amid the emergence of the omicron variant. But the current extension expires in April, which means federal student loan borrowers will need to resume making payments in May.

The exact date for the resumption of payments will depend on when the borrower was due to repay before the pandemic. For example, a borrower who paid off their student loans on the 15th of the month will need to restart payments starting May 15, 2022.

Borrowers unable to resume payments in May risk student loan delays, which could lead to wage withholding. If you need more time to get ready to pay off your student loan this spring, consider applying for up to 36 months of additional federal forbearance by requesting a deferment in the event of economic hardship or unemployment.

You can also consider alternative debt repayment options, such as refinancing for a private student loan at a lower interest rate to reduce your monthly payments. Keep in mind that refinancing your federal loans into a private loan will make you ineligible for certain government benefits such as income-driven repayment plans (IDRs), COVID-19 administrative forbearance and some student loan forgiveness programs.

Visit Credible to see estimated student loan refinancing offers without affecting your credit score.

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2. Many borrowers will get a new loan service

Several prominent student loan service providers, including Navient, FedLoan Service and Granite State Management & Resources, have exited the federal student loan service market. The loans of borrowers whose loans have been serviced by these institutions will be automatically transferred to the new service provider.

Borrowers whose loans have been transferred to the new Student Loan Service must have already received email communications through the Student Financial Aid Office (FSA). The Biden administration began notifying borrowers of the student loan service switch in November.

The FSA email notifies the borrower of the transfer of the student loan service.

If the student loan service changes, the loan terms — including the monthly payment, repayment due date, and interest rate — will remain the same. But if you are not satisfied with the current loan terms, you can consider refinancing while student loan refinancing rates are near all-time lows.

Refinancing your student debt to a lower interest rate may help you reduce your monthly payments, pay off your debt faster and save money on interest over the life of the loan. Use the Credible Student Loan Refinance Calculator to determine if a debt repayment plan is right for you.

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3. It may be easier to qualify for student loan forgiveness

The Department of Education announced major changes to several federal student loan forgiveness programs in 2021 that will make more borrowers eligible for their loans in 2022 and beyond. One of the most comprehensive reforms was the Public Service Loan Forgiveness (PSLF) program.

The PSLF program allows public servants to dispose of the remainder of their federal student debt after 120 consecutive qualifying payments have been made. Under the PSLF Extended Temporary Waiver, eligible borrowers who apply for the program will be able to count more of their student loan payments into this balance.

The Biden administration estimates that the latest PSLF update will bring 550,000 borrowers closer to about two years from student loan cancellation, on average. Borrowers with FFEL and Federal Perkins loans will need to integrate into the Direct Loan Program by October 2022 in order to qualify.

If you have loans that do not qualify for student loan cancellation, such as private student loans, it may be wise to refinance on better terms. Find out if you qualify for a lower student loan interest rate by getting pre-qualified for free on Credible.

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Have a question related to financing, but don’t know who to ask? Send an email to our certified money expert moneyexpert@credible.com And your question may be answered by Credible in the Money Expert column.

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