Huge Changes in Student Loan Repayments In 2022 What to do

The federal student loan repayment suspension will expire on January 31, 2022. Despite repeated requests for this relief, the Biden administration still hasn’t indicated that they intend to. This February, millions of federal student loans borrowers will resume their repayments.

The repayment terms for many student loan borrowers could be different in 2022 than they were before the student loans payment pause. Here’s the scoop.

New Biden Executive Order Will Streamline Student Loan Repayment

President Biden signed this week an executive order that directed numerous federal agencies in reducing customer service. This order applies to the Department of Education’s Student Loan System. This initiative will see the Department implement a new federal student loan repayment system in 2022. Direct federal student loan holders can now manage their loans using a “single payment portal” on StudentAid.gov.

According to the Department of Education, this government portal will allow borrowers to “apply for and manage their loans without having to go to multiple websites or manage multiple credentials.” Borrowers can currently view their federal student loans information and apply through StudentAid.gov for Direct consolidation loans and income-driven repayment plans. All federal student loan borrowers can access and repay their loans from one portal, regardless of which federal loan servicer they use.

U.S. Secretary Miguel Cardona said that the Department is “attuned” to the needs and wants of all those it serves, including students, educators, families, and communities. Cardona stated that the Department was committed to improving access, affordability, and success in postsecondary education.

While the Department has been working to establish this universal federal student loans portal for many years, they have not yet given a timeline.

Self-Reporting to Income-Based Repayment Programs

The Department of Education temporarily will ease administrative requirements for borrowers renewing or applying for income-driven repay (IDR) plans. IDR refers to a group of repayment plans that link borrowers’ monthly payments to their reported income and family sizes. Payments must typically be recalculated each year, and adjusted according to changes in the borrower’s income.

Borrowers will need to provide proof of income. They can either submit their most recent federal tax returns or alternative documentation such as a pay statement or a letter from their employer. The Department indicates that it will allow more flexibility to borrowers as they return to student loan repayment, at least for the first half of 2022. The Department sent mass emails to borrowers stating that self-reporting income is possible if your loans are Direct Loans. Apply for an IDR Plan now to get your payments to resume.

Self-reporting will enable borrowers to simply self certify their income and not have to submit documentation. Due to the high number of borrowers that will be taking on repayment simultaneously after the January payment pause expires, self-reporting makes it easier for borrowers to access IDR.

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Federal Student Loan Servicing Changes

The goal of the Biden Administration is to transfer most Direct federal student loans repayment operations to StudentAid.gov. This will allow borrowers to effectively bypass student loan servicers. However, most borrowers will still need their loan servicers when repayment begins in February. There has been some turmoil in student loan servicing over the past year. Servicers have announced that they are withdrawing from the Department’s loan servicing program.

Navient currently has the federal student loans of government that are being serviced by Navient. They are being transferred over to Advantage, Maximus’s new Direct loan servicing arm.

FedLoan Servicing (currently handling the Public Service Loan Forgiveness program) will also be exiting federal student loans. Some FedLoan accounts have already been transferred from FedLoan Servicing to MOHELA, a Department loan servicer. Other FedLoan accounts may be transferred to other services in 2022. MOHELA, a Department loan servicer, recently extended its contract by one year with the Department of Education.

The Department has reached an agreement to extend its two-year servicing contract with several federal student loans servicing contractors, including Edfinancial MOHELA, Great Lakes Higher Education, Edfinancial, and Nelnet.

Borrowers can check StudentAid.gov and get current information about their loan servicers. They should also contact their loan servicing agents to correct their contact information or confirm their auto-debit arrangement if any.

Public Service Loan Forgiveness (PSLF), Modifications

In October, Biden’s administration created the Limited PSLF Waiver program. It temporarily reduces the rules for student loan forgiveness for employees of certain government agencies and nonprofit organizations. This waiver will allow thousands of borrowers to be eligible for student loan forgiveness until October 31, 2022. FedLoan Servicing continues to manage the PSLF program. However, the Department of Education is increasing its efforts to review eligibility to approve loan forgiveness under this waiver program for most of the year.

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Biden’s executive directive this week, issued by the White House, has indicated that the administration intends to further streamline PSLF. The Department stated that “Public Service Loan Forgiveness applicants, including civil service personnel and active-duty members, will have the ability to apply for it with less paperwork than now and without having to complete forms with the information they have already submitted to the Federal Government previously.” Some borrowers may be able eventually to be automatically certified for PSLF using data-sharing tools that are used between federal government agencies. This could allow them to avoid submitting annual paperwork. The Department does not provide a time frame for the rollout.

Contact Student Loan Forgiveness Application to see if you qualify for some relief in your student loans. You need to submit an application form and our representative will contact you.

Alex Gold

Alex Gold

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SLFA is a private company and does not claim to be affiliated with any Federal, State, or Local Government agencies. People with student loan debt have the legal right to use an attorney or process federal student loan documentation on their own behalf without paid assistance. Our mission is to provide people with the credit repair, knowledge, information, and document preparation service they need to deal with all the financial decisions to find what they need and return to life effortlessly.

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