The end of the coronavirus forbearance period is quickly approaching, so you might be wondering the big question — when do student loans resume? So far, there have been seven student loan extensions totaling in over a year of payment-free forbearance.
But will there be another?
Here’s what we know about the end of forbearance so far and what to expect when your student loans resume.
When Was the Student Loan Freeze Implemented?
The student loan payment pause has been in effect since March 2020, when Congress passed the CARES Act. The loan payments were supposed to resume in September of that same year.
However, this date was pushed back three times by Trump and four times under Biden’s presidency.
The payment and interest moratorium applied to all federal student loans, regardless of the servicing company.
Therefore, student loans that are currently on hold include:
- Direct loans funded by the federal government
- The Federal Family Education Loan program (FFEL), backed by the Department of Education
- Federal Perkins Loans granted by the Department of Education
- Defaulted FFEL loans that the Department of Education doesn’t regulate
- Defaulted Health Education Assistance loans (HEAL)
On the other hand, there was no student loan payment suspension on:
- Nondefaulted Federal Family Education Loans that aren‘t under the Department of Education
- Federal Perkins Loans that aren‘t under the Department of Education
- Nondefaulted HEAL loans
- Private student loans
So, if your student loans met the requirements, both payments and interest have been automatically paused since March 13, 2020.
Current Deadlines for Student Loan Payments Resume
In addition to canceling up to $20,000 in student debt, the US President, Joe Biden, stated he was prolonging the current suspension on student loan repayments and interest until January 1, 2023.
This means the current loan pause will end on December 31, 2022, with payments resuming again on January 1, 2023.
But will there be another student loan pause extension?
We still can’t know for sure. Some experts believe Biden will extend the date until July 2023, which is when federal student loan programs could be revised.
However, the announcement of $10,000 to $20,000 in student loan forgiveness might prevent any future extensions from being put into place.
All taken into consideration, it seems unlikely that there will be another student loan extension in 2022 or 2023. This means that borrowers who are struggling to make their payments may have to start paying back their loans very soon.
When Is the Deadline to Apply for Student Loan Forgiveness?
If you’re looking for student debt relief, you have until December 31, 2023, to submit an application.
However, the White House is advising individuals to fill out the necessary paperwork before mid-November (so their application can be processed before the student loans resume date).
Get Ready for Student Debt Relief
Now that you know a bit more about the time you are given, let’s check out some of the most common questions and resolve any dilemmas you may have about your eligibility or
Who Is Eligible for Student Debt Relief?
If you earn under $125,000 per year as an individual borrower (or under $250,000 together with your spouse if you decide to file a joint application), the Department of Education will forgive up to $10,000 in federal student loan debt.
On top of that, if you were a recipient of federal Pell Grants while attending college, you could get an additional $10,000 in debt relief.
To apply for the student loan forgiveness stimulus, you must provide the following information:
- Your name
- Your SSN
- Date of birth
- Phone number
- Email address
After completing the “Borrower Information” section, move on to the “Review and Submit the Agreement” section. Here, you’ll be asked to confirm your eligibility by providing proof of income (if asked) to the Department of Education (before March 31, 2024).
Who Is Eligible for Automatic Student Loan Debt Relief?
Those enrolled in income-driven repayment programs and those who filed FAFSA (the Free Application for Student Aid) will automatically receive student loan payment suspension.
If you qualify for automatic debt removal, the Education Department will send you an email informing you there’s no need to apply and offering the opportunity to decline student loan forgiveness.
You’ll get a similar message via text if you have a Federal Student Aid account.
How to Prepare for Student Loan Payments
Given that the student loan repayment date is just around the corner, here’s how you can get ready:
Speak With Your Student Loan Servicer
The total student loan debt in the US amounts to $1.75 trillion, which means Americans owe an average of $28,950 per borrower.
To find out how much debt you have and what repayment plan may work best for you, speak with your student loan servicer. Keep in mind that your payments may look different now, after the pandemic.
If you have some extra cash saved up, ask your servicer if you can put that towards your loan’s principal balance to pay off the loan more quickly.
Make sure to contact your servicer before the student loan pause end date or about a month before your first post-pause payment is due to find out what you need to do to resume making payments.
Talk to Your Employer
Some employers offer student loan debt assistance, which can help you pay off your loans faster.
For example, Aetna offers student loan debt assistance to its full- and part-time employees. The company will match employee student loan payments up to $2,000 per year (with a lifetime maximum of $10,000).
At the same time, Google will match $2,500 per year towards an employee’s student loan payments.
Start Saving ASAP
When does student loan repayment start?
As we already mentioned above, the repayment will start at the beginning of the next year, which means you still have enough time to get ready.
So, if you’re able, it would be a good idea to start setting aside money each month to make your student loan payments.
The sooner you start saving, the less of a shock it’ll be when your payments resume. For example, you can open a savings account for your student loan payments.
Since student loan interest typically begins to accrue once you receive the funds, you may want to pay down your loans while still attending school.
Besides saving, you can also set up an autopay about one month before the student loans resume. If you sign up for automatic payments, you’ll get a 0.25% discount on your interest rate for federal student loans, which can save you a lot of money in the long run.
There’s still some time before the seventh student loan payment pause ends on December 31. While there’s a possibility that the repayment could be further extended, this is unlikely.
So, make good use of the tips described above, and do your best to become loan-free as soon as possible.
Will there be student loan forgiveness in 2023?
Yes, there will. You have until December 31, 2023, to apply for student loan forgiveness from the government.
However, if you want your application to be processed before the repayment process resumes in January 2023, make sure to complete the required documentation no later than mid-November 2022.
When will student loan forgiveness be applied?
Students can expect their application for loan forgiveness to be processed within four to six weeks. However, they must apply before November 15, 2022, if they want their loans to be forgiven in 2022.
If you’re a qualified borrower, you may see your forgiveness sooner than anticipated. This is especially true for those with income-driven repayment plans or those who filed FAFSA and are eligible for automatic student loan debt relief.
Are student loans going to be paused again?
It’s hard to say. Some experts believe that the current pause on student loan repayments and interest will be extended until July 2023, while others believe this will be the last loan extension.
When do student loans resume? Payments will resume again in January 2023.