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Student Loan Repayment On Hold Policy Update

1/23/2023 UPDATE: StudentAid.gov has the following disclaimer on its official site:

“The student loan payment pause is extended until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved.” The official site notes that when the pause is lifted, payments are (at press time) due to restart 60 days following the end of the pause. What happens if circumstances force the pause to continue until June 30, 2023? According to StudentAid.gov, payments resume “60 days after that. We will notify borrowers before payments restart.”

Student Loan Repayment Paused

On December 22nd, 2021, the U.S. Department of Education (DoE) announced a 90-day extension of the pause on repayment, collection, and interest of most federal student loans. The administrative pause was originally scheduled until May 1, 2022.

The DoE estimates that this extension will help 41 million borrowers save $5 billion per month.

The Impact on Federal Student Loans

If you have Federal Student Loans, then you need to understand how this move impacts you.

This program offers temporary repayment relief to those with qualified student loans. However, not all loans are covered.

Loans Not Covered

For example, the Family Federal Education Loan (FFEL), an older loan program, and Perkins Loans owned by the school you attend(ed), do not qualify for this pause in collection and payment. That means you should still plan to make your monthly payments if you have these types of loans.

Qualified Loans

If you have loans that qualify for this temporary relief, then there is nothing you must do at this time. The Department of Education has automatically placed all qualified loans into a state called “administrative forbearance”. This means that you can stop making payment right away until 1 May, 2022.

For those borrowers who wish to continue making payments on their federal student loans, the interest rate is currently 0%. That means that any payments you make now will all go to the principal, which would ultimately help you pay off your loans faster.

If, however, you are on an income-based repayment program, a forgiveness program, or both, you should probably check out the Federal Student Aid Coronavirus page to determine your best course of action.

Student Loans In Default

If your student loans are in Default status, then the Department of Education should have stopped contacting you regarding payment and collection. This will only last until 1 May 2022, so they will likely start sending letters and making calls once that time passes.

If your employer has garnished your wages as a result of your student loan default, then you will get a refund. However, the garnishment may start again once the deadline passes.

RELATED: Military Service Could Eliminate Student Loan Debt

Which loans do I have?

This temporary relief applies only to federal student loans. If you’re unsure what types of student loans you have, take the following steps:

  1. Pull your credit report to get a complete list of your private and federal student loans. You can request a free copy each week from now until April 20, 2022, by going to AnnualCreditReport.com.
  2. Carefully go through your credit report, find your student loans, and write down the lending companies or loan servicers.
  3. Then, compare that list to the full list of Federal Loan Servicers. The ones on your list that match the federal list are federal student loans.
  4. For assistance, log into your Federal Student Aid account or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

This information should help you determine whether the student loans you have are federal or not.

A Final Note of Warning

Recently, the FTC warned student borrowers about hiring a third party agency to claim this temporary relief, advising that the process is “automatic” for all qualified federal student loans, so you don’t have to enroll or apply.

In the words of the FTC, “Anyone who tells you they can help you sign up for this program for a fee is a scammer.”

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About the author

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Robert Haynes is a retired Army infantryman who has a squad of kids and is married to an active duty Soldier. He is a veteran of Operation Iraqi Freedom, who spent his last few years in the Army as a Drill Sergeant. He is now a full-time dad, freelance writer, and out-of-work comedian.