Three things to know before the student loan payment pause ends
(NEXSTAR) – In less than 40 days, the payment pause on federal student loans is set to lift. Thanks to the COVID-19 pandemic, and actions by both President Trump and President Biden, borrowers haven’t had to make payments and loans haven’t collected interest since March 2020.
That is currently set to change Sept. 1 unless President Biden extends the payment moratorium again.
Here are three things you should know before payments resume.
Preparing for payments
Payments, 0% interest rates, and collection on defaulted loans are suspended through Aug. 31.
Once the pause ends, at least 21 days before your payment is due, you will receive a statement or notice, according to the Federal Student Aid office. This will include how much you owe and when exactly it’s due. Your loan servicer may already have an estimated payment amount and due date for you.
Until then, FSA recommends updating your contact information on your profile with your loan servicer and in your StudentAid.gov profile. With your loan servicer, you’ll want to review or set up your auto-debit enrollment.
Auto-debit payments won’t restart automatically for most borrowers. Instead, you’ll likely have to opt in to confirm enrollment, according to FSA. Your auto-debit payments status will have an impact on what sort of action you need to take before payments begin again.
You can also use the FSA’s Loan Simulator to find a repayment plan, such as an income-driven repayment plan. If you are already set up with an income-driven repayment (IDR) plan, but your income changed recently, you may be eligible for a lower payment amount.
Check your forgiveness eligibility
While the payment pause is set to end next month, you still have over three months to take advantage of a temporary waiver for a loan forgiveness program.
Earlier this month, the Education Department sent millions of borrowers emails urging them to check their eligibility for the Public Service Loan Forgiveness program, or PSLF. The program provides loan forgiveness to public service employees after 120 qualifying loan payments have been made.
Last year, a waiver on certain PSLF requirements was enacted to grant borrowers credit toward loan cancellation regardless of their federal loan type or if they had been enrolled in a specific payment plan, as long as they consolidated their debt into a Direct Loan before the end of the waiver.
This waiver is currently set to expire after Oct. 31, 2022, meaning eligible borrowers have less than four months to apply.
To determine if you qualify, and for instructions on how to apply, click here.
Biden is going to make a decision on student loans soon
President Biden, when questioned about student loans last week, said he would make a decision “by the end of August.”
It’s still unclear what exactly that decision entails.
There are also calls to extend the payment pause and the PSLF waiver.
Richard Cordray, the head of Federal Student Aid, said earlier this year at a conference that while he is pushing for the PSLF waiver to be extended, President Biden may lack the executive authority to approve such a move.
In addition to calling for the PSLF waiver to be extended, 134 organizations recently sent a letter to Biden urging him to extend the payment pause until after proposed adjustments to IDR have been processed.
Education Department Secretary Miguel Cardona previously said borrowers would receive “ample notice” on payments resuming. When Biden announced the most recent payment pause on April 5, payments were set to begin in less than a month.