By Adam S. Minsky
With $1.8 trillion outstanding, student loan debt has been at the forefront of national debate over the course of the last two years. And student loan borrowers have been on a rollercoaster after being forced through significant and often abrupt short-term changes, while dealing with widespread long-term uncertainty.
Unfortunately, even more changes are ahead. Here’s what borrowers can expect in terms of student loan forgiveness, repayment, servicing, and scams in the coming months.
Student Loan Pause Is Ending
Last month, the Biden administration extended the student loan payment pause, interest suspension, and collections moratorium to January 31, 2022. The relief, which was originally enacted in March of last year, had been set to end on September 30 after several previous extensions. The Biden administration has repeatedly characterized the most recent extension as the “final” one — so don’t expect the payment pause to be extended again after January. This means that millions of borrowers will have to resume repayment on their student loans in February of 2022.
Between now and then, expect to receive a barrage of communications from the Department of Education and its contracted loan servicers regarding the resumption of repayment. The Department has already started sending out mass emails to borrowers warning them to “start planning for repayment.” Expect a lot more of this kind of correspondence in the coming months. Make sure to update your contact information, and start evaluating your repayment plan options.
Student Loan Servicing Is Changing
Earlier this year, two major student loan servicers — FedLoan Servicing, and Granite State Management and Resources — announced that they would not be renewing their servicing contracts with the Department of Education. Their existing contracts expire in December. This means that the Biden administration will need to find new student loan servicers to take over approximately 10 million borrower accounts. The Department has not yet announced specifics regarding a plan or a timeline, but we should know more before the end of the year.
Borrowers should start preparing now for possible student loan servicing changes by updating their contact information, and downloading and saving pertinent student loan records and correspondence. Borrowers on track for Public Service Loan Forgiveness (PSLF) should be especially thorough in retaining their records. PSLF borrowers may also want to submit one final employment certification to get an updated count of qualifying PSLF payments before the transfer occurs.