Here’s what student loan repayment means for your student loans.
Here is what you need to know.
After 22 months of unprecedented student loan relief, federal student loan repayments will resume as of February 1. Since March 2020, student loan borrowers have received several student loan benefits, including:
- no mandatory federal student loan payments;
- 0% interest on federal student loans;
- no collection of defaulted student loans.
As of January 31, 2022, this temporary student loan forbearance will end and more than 40 million student loan borrowers will resume student loan repayments. (No, Biden will no longer extend the student loan relief). Here are 7 things you should know:
1. Which student loans are affected by the end of student loan relief?
This student loan relief only impacted federal student loans. Therefore, effective February 1, 2022, you will again need to make monthly payments for your Federal Student Loan. Temporary student loan relief due to the Covid-19 pandemic did not apply to private loans. As of February 1, 2022, you will be making private and federal student loan repayments as you did before the Covid-19 pandemic. (Why Biden Ended Student Loan Relief).
2. What is my new interest rate?
As of March 2020, Federal Student Loans temporarily had an interest rate of 0%. This means that no new interest has been accrued on your federal student loans during the student loan forbearance period. Private loans did not have this advantage. As of February 1, 2022, your student loans will include the usual interest rate you had before the Covid-19 pandemic. (Don’t expect Biden to write off student loans until student loan relief ends.) Since federal student loans today have a fixed interest rate, you should have the same interest rate as in March 2020. That said, some older federal student loans had a variable interest rate, so if you have an older federal student loan, your interest rate may have changed.
3. When is my student loan payment due?
Your student loan payment is not necessarily due on February 1, 2022. On the contrary, your federal student loan payments will be due. departure February 1st. Therefore, each borrower will have a specific due date. Check your student loan statement to confirm the due date or contact your student loan manager for more details.
4. Who is my student loan manager?
Your student loan manager is the company to which you make the student loan payments. Most student loan borrowers will have the same federal student loan manager as before the Covid-19 pandemic. Your private student loan manager may be the same company or a different company. That said, about 16 million student loan borrowers will have a new federal student loan service in 2022. That includes Navient, one of the major student loan services, leaving the federal student loan service. If your federal student loan manager changes, the US Department of Education will send you written correspondence detailing the change and informing you of your new student loan manager. You can also check your Federal Student Aid (FSA) account to confirm your student loan manager. (Here’s a list of everyone who wants Biden to extend student loan relief.)
5. Does the end of student loan relief affect the cancellation of student loans?
Yes, the termination of student loan relief may affect the cancellation of the student loan. (How to qualify for the automatic student loan exemption). The good news is that student loan waivers and waivers are still available. This includes the cancellation of the student loan through the cancellation of the civil service loan, for example, or the cancellation of the student loan by the defense of the borrower to the repayment of the student loan, for example. That said, during the 22-month student loan forbearance period, the US Department of Education “counted” federal student loan defaults for the purposes of student loan cancellation. This includes both income-driven repayment plans, which require 20 to 25 years of monthly student loan payments, and civil service loan cancellation, which requires 120 monthly student loan payments. As of February 1, 2022, student loan borrowers will be required to make federal student loan repayments to obtain “credit” for these monthly payment requirements.
6. What if I can’t afford my student loan repayments?
If you can’t afford to pay off your student loan, there are several options available to you. Contact your student loan manager for more details. For federal student loans, you can explore forbearance or deferral. However, interest can accrue on your student loan balance even if you don’t make a repayment. A better alternative is an income-based repayment plan such as IBR, PAYE, REPAYE, or REPAYE, which will set your monthly student loan payment based on your discretionary income, family size and condition. residence.
7. How can I get a lower interest rate on my student loans?
The best way to get a lower interest rate on your student loans is to student loan refinancing. Refinancing a student loan helps you get a lower rate for private and federal loans, and can lower your monthly student loan payment as well. Rates start at 1.74% now, and you can choose a fixed or variable interest rate.
To qualify, you must be employed or have a signed job offer, have a stable monthly income to pay for student loans and other living expenses, and at least a credit score of 650. When you refinance student loans, the resulting loan is a private loan. So, if you are pursuing repayment plans or federal benefits such as income-tested or civil service remission, for example, you may want to refinance only your private loans. However, some borrowers prefer to refinance both private and federal loans. It depends on your particular situation.
The end of temporary student loan relief doesn’t have to be scary. The most important part is understanding all of your options and having a clear strategy. Here are some popular ways to save money and pay off student loans faster: