Federal Student Loan Payments Resume
Federal Student Loan Payments Resume – In August, the administration of President Joe Biden announced another extension of the pause in federal student loan payments, which runs until January 31, 2022.
AUGUSTA, Maine — If you’re a college student in debt, you may have received an email this week from a federal student loan servicer reminding you that in about three months, your payments will increase again. It’s another way life is returning to some kind of normal after the pandemic.
Federal Student Loan Payments Resume
In August, the Biden administration announced that it would extend the pause on federal student loan payments for the last time until January 31, 2022. After that date, all repayments and interest calculations, as well as collections on loans that were not paid before the pause, will resume. For many, this means that their next payment will be due in February or March. so experts want to make sure you’re ready.
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“It’s going to be almost two years before borrowers have to start making payments again, so they’re really going to have to get back into the habit of re-paying their loans every month,” said Mary Dyer, head of financial education programs at Finance. Maine Authority. “For many borrowers, that loan repayment may have been diverted to other expenses, so that will be a little more difficult to reestablish.”
If you’re a graduate student in debt, you may have received an email this week from your federal student loan servicer reminding you that payments will resume after January 31st. I spoke with @FAMEmaine about how to prepare. More @ 6 & 6:30am #wakeMEup pic.twitter.com/4K4rBTNHdB — Chloe Teboe (@ChloeTeboe) October 28, 2021
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Dyer says he anticipates there will be some challenges, since there are about 42 million student loan borrowers nationwide, and this two-year hiatus was unprecedented.
“If you think about it in a kind of analogy with going to the gym, once we establish that habit of going to the gym every day, we’ll get into a really good rhythm,” Dyer explained. “Then as soon as something happens to kind of stop that, whether it’s a vacation or something that breaks that habit, it’s so hard for us to get back on track, and student loans are very, very similar in that sense.”
Dyer said some borrowers are still struggling financially, and there are other options if you can’t pay off your loans right away. You can find them out through your service provider. She said you should start paying off other debt, increasing what you have available in cash and savings, and building an emergency fund. If you have federal and private loans, you should compare their interest rates and try to pay more on the loan with the higher rate.
Dyer said borrowers should also be wary of student loan scams. If you receive a phone call from a company promising loan forgiveness and repayment assistance, you should be cautious and contact your servicer or FAME before taking any action.
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FAME has a number of financial health tools available online. You can learn more about them by clicking here. “Later this week we will announce whether we will be extending the break further,” said a spokesperson for the Ministry of Education.
Activists and artists are calling on President Biden to not resume student loan payments in February and to cancel student debt near the White House. | Paul Morigi/Getty Images
The Biden administration is considering extending a freeze on federal student loan payments amid a surge in Covid cases and pushback from Democrats who have opposed sending student loan bills to tens of millions of Americans in the coming weeks.
For months, Education Department officials have publicly insisted that student loan repayments begin on Feb. 1 when existing pandemic relief — which has been extended several times by both the Trump and Biden administrations — expires.
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But on Tuesday, an Education Ministry official indicated that the resumption of student loan payments could be delayed again.
“Later this week, we will announce whether we will extend the break,” a spokesperson for the Ministry of Education said in a statement to .
The administration’s shift in thinking about the fast-approaching Feb. 1 deadline to restart payments comes as the White House has faced a barrage of pressure from Democrats seeking another extension of relief.
The White House previously said it was evaluating the impact of the Omicron variant, but said it was still preparing to restart collecting monthly payments on February 1.
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Reported over the weekend a tense meeting between White House officials and student debt activists who want Biden to extend the relief and use executive action to cancel much of the outstanding student loan debt. White House officials at the time were not convinced to extend the relief, the report said, citing people familiar with the meeting.
Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) said earlier this month that the moratorium on student loan payments and interest should be extended until the economy reaches pre-pandemic employment levels.
Some progressives have been more open about the political consequences they fear next year unless the Biden administration takes more aggressive steps to help student loan borrowers — especially after the collapse of Build Back Better negotiations.
“Since the BBB has been delayed, the child tax credit will expire and student loans will start again within a few weeks. Working families could lose thousands of dollars a month just as prices rise,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said on Twitter Monday. “That alone is reason for @POTUS to act ASAP on student loans – no moratoriums or cancellations.”
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Rep. Ro Khanna (D-Calif.) said on Twitter that the Biden administration’s plans to restart student loan repayment “makes no sense.” He added: “Terrible in content and terrible politics. We have to be better to deserve the win in 2022.”
“We need to address student debt in general, but in the meantime an extension would be a step in the right direction,” said Sen. Raphael Warnock (D-Ga.), who is up for re-election in 2022. He said the aid would also help “families that struggling in the midst of a pandemic” and the economy as a whole.
Warnock earlier this month led a letter with 13 other Senate Democrats to Biden urging the administration to at least continue to keep interest rates on federal student loans at 0 percent, even if monthly payments resume. Sen. Chris Van Hollen (D-Med.), who signed the letter, said he thinks the administration is considering extending the relief. “I don’t know what the chances are at this point, but we’re pretty much pushing them,” he said Friday.
Rep. Bobby Scott (D-Va.), chairman of the House Education Committee, also supports continuing the pause on student loan interest, a committee aide confirmed Tuesday.
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A coalition of labor and student and consumer groups also called for extending the relief — as did several think tanks aligned with Biden’s Department of Education.
Republicans, meanwhile, have previously called on the Department of Education to restart student loan payments, citing the increasing costs to taxpayers of interest waivers and deferred payments. The department estimated that pandemic student loan relief added nearly $42 billion to the cost of the student loan program in fiscal year 2020; in fiscal year 2021, it cost an additional $53 billion.
More than 40 million Americans benefited from the federal government’s emergency student loan relief program, which began with the outbreak of the pandemic in March 2020. Congress paused interest and monthly payments for federal student loan borrowers in the CARES Act — which the Trump and Biden administrations subsequently extended through executive measures several times.
Most recently, in August, the Biden administration passed what it called a “final” extension of the relief, which is set to expire at the end of January.
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“From day one of the Biden administration, we have worked hard to provide meaningful relief to student loan borrowers,” a Department of Education spokesman said in a statement Tuesday. “It started by extending the federal student loan repayment pause until January 31, 2022. To date, the pause has saved tens of billions of dollars for 41 million borrowers.”
Department officials sent notices to borrowers about the resumption of payments and also planned ways to soften the blow of next year’s resumption of payments. Officials considered offering an initial 90-day grace period for missed payments, as well as a comprehensive plan to wipe out defaults for borrowers who were struggling even before the pandemic. These plans have been discussed within the administration, but have not yet been made public.
Last week, Department of Education officials announced that they will make it easier for borrowers to participate in income-based repayment plans by accepting self-certification of their income, rather than requiring them to submit tax documents.
Department officials invited outside groups
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