Millions of borrowers will be eligible for the newly announced Student Loan Forgiveness Initiative. At the same time, however, many borrowers whose loans are not fully canceled will begin repaying their remaining balance within a few weeks.
After almost three years and several extensions, the ongoing Covid-related student loan moratorium is set to end on December 31, and there is no indication that it will be extended again.
“While we are alleviating student debt, we are also resuming student loan payments that have been suspended during the pandemic,” President Biden said. public comment this week. “In January, those whose debts have not been fully written off will resume their student loan payments.”
Student loan borrowers need to take steps now to maximize their chances of loan forgiveness and prepare for repayment. Here’s what you can do:
Check Student Loan Forgiveness Programs
The Biden administration has rolled out multiple new student loan forgiveness programs in recent months and there is still an opportunity to apply. Borrowers now need to assess their potential eligibility and receive benefits. Time should be taken to determine what, if any, action is necessary. Here are some of the more significant student loan forgiveness initiatives available today.
Check if your student loan servicer has changed
While most federal student loans have been suspended since March 2020, there have been many changes within the federal student loan system. Several loan servicers have left the Department of Education’s Federal Student Assistance System and new servicers have entered. Since the suspension of payments began, 10 to 20 million borrowers have experienced changes in loan services, and many may not even be aware of it.
Some of the biggest changes include Navient transferring its entire portfolio of government-owned federal student loans to Aidvantage. MOHELA also took over the Public Service Loan Forgiveness (PSLF) program from FedLoan Servicing. Other accounts previously with FedLoan Servicing have been transferred to other loan servicers such as EdFinancial.
Borrowers should check their current Federal Student Loan Servicer details by logging into their Department of Education account. StudentAid.govIf you have a new loan servicer, set up an online account with that new servicer to get the latest loan details and student loan communications.
Update your student loan servicer and contact information
A lot has changed for many student loan borrowers since March 2020. You may have moved or got a new phone number or email address. With repayments set to resume, it’s an important time to make sure your contact information with the Department of Education and student loan servicers is up to date. Missing important communications about repayment or student loan forgiveness opportunities can cause serious problems.
Take a Fresh Start to Get Out of Student Loan Default
For defaulting federal student loan borrowers, the Department of Education offers a one-time opportunity called the Fresh Start Initiative that allows many borrowers to get out of default and get their loans back in good standing. Getting out of default is not only important to avoid harmful consequences such as persistent negative credit reports and wage garnishments, but also to qualify for some student loan forgiveness programs. may be required.
Fresh Start is not yet available, but should be available by January.you can learn more here.
Prove employment for Public Service Loan Forgiveness (PSLF)
Borrowers seeking Public Service Loan Forgiveness (PSLF) (Student Loan Forgiveness Program for Borrowers Working for Non-Profit Organizations or Government Entities) will receive a “qualified payment” credit only upon submission of the PSLF Employment Proof Form. You can receive it. The borrower must periodically resubmit a new employer-signed certification form to obtain an updated PSLF eligible payout number.
The limited PSLF waiver ended on October 31, but borrowers can continue to receive PSLF retroactive credit. In practice, you can only do so by continuing to resubmit your PSLF Employment Certificate on a regular basis. If you haven’t certified for PSLF employment in a while, now is a good time to do so.Ministry of Education PSLF help tool.
Borrowers on income-driven repayment (IDR) plans should prepare to repay
Borrowers who were on an Income-Driven Repayment (IDR) plan when the payment suspension began in March 2020 will be able to continue on the plan at the amount they were paying before when payments resumed in January. (if not applicable). switch plans or recalculate your IDR payment). The borrower will not have to re-certify his IDR plan income until 2023.
Borrowers who were on an IDR plan but experienced changes in economic conditions, such as unemployment or reduced income after 2020, are encouraged to consider requesting a recalculation of their IDR payments by January. To do. Borrower has the right to request recalculation of her IDR payment at any time based on changing circumstances.can start the process here.
Evaluate Student Loan Repayment Plan Options
For all student loan borrowers, now is a good time to evaluate repayment plan options.The borrower is the Ministry of Education repayment simulator.
Borrowers who cannot afford the monthly payments on the Standard, Extended, or Graduate plans are encouraged to consider the IDR plans instead. The Department of Education is also working on a new IDR plan, details of which may be released by his January.