Biden Administration Extends Federal Student Loan Payment Pause
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The Biden administration is extending the pause on federal student loan payments one last time until Jan. 31.
The pandemic relief benefit was set to expire on Sept. 30 after an unprecedented 19-month suspension. The freeze was initially put in place by Congress and then extended by both the Trump and Biden administrations.
“As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” said Education Secretary Miguel Cardona in a statement.
Borrower balances have effectively been frozen for more than a year, with no payments required on federal loans since March 2020. During this time, interest has stopped adding up saving the average borrower about $2,000 over the first year and collections on defaulted debt have been on hold.
The relief is even more significant for those who work in the public sector and may be eligible for loan forgiveness after 10 years. They are still receiving credit toward those 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full time for qualifying employers.
If You Dont Repay Your Loans
If you don’t make your loan payments, you will be in default.
An OSAP loan is considered to be in default when no required payments have been made for 270 days.
Being in default means:
- your debt will be turned over to a collection agency
- you will be reported to a credit bureau
- you could be ineligible for further OSAP until the default is cleared
- your ability to get a car loan, mortgage or credit card can be affected
- your income tax refund and HST rebate can be withheld
- interest will continue to build up on the unpaid balance of your loan
Your OSAP debt will only be erased when you have paid it off in full.
Extend Your Grace Period By Another Six Months If You:
You make loan payments to the National Student Loans Service Centre, not to OSAP.
Your payments are based on a 9 ½ year pay-back schedule. This pay-back schedule is the average amount of time it takes to pay back an OSAP loan.
You can make payments on your loan at any time to repay it faster.
Get repayment assistance:
If youre having trouble repaying your loan, you might be able to get repayment assistance.
If you have a severe permanent disability and you cant attend work or school, you can apply for the Severe Permanent Disability Benefit. Contact the National Student Loans Service Centre.
Extend your repayment period:
You can lower your monthly payments by extending your repayment period from 9 ½ up to 14 ½ years. Log in to your National Student Loans Service Centre account.
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President Joe Biden Contemplating How To Restart Student Loan Payments
The Biden Administration is developing plans for how it will restart federal student loan payments next year when the pause on monthly payments will end.
The Education Department is eyeing proposals to give borrowers more options and flexibility as they face student loan payments for the first time in two years. Options include an initial grace period for missed payments.
Education officials are also discussing policies to make it easier for millions of borrowers to remain enrolled in income-based repayment programs, allowing borrowers to avoid a sudden increase in their monthly payment.
The plans are being developed to avoid a surge in delinquencies when payments resume in February 2022. Currently, more than 40 million borrowers owe $1.59 trillion in student loan payments. The situation has also drawn political lines as Progressive Democrats have been pressuring Biden to cancel widespread student loan debt since the day he was sworn into office.
Education Secretary Miguel Cardona has said he wants a smooth ramp up for borrowers to restart payments. The departments Student Aid Chief Rich Cordray told Politico the agency is discussing a major public outreach campaign including paid advertisements, to make student loan borrowers aware of their options.
How To Apply For Forbearance
If youre applying for a discretionary forbearance, you must complete the General Forbearance Request and submit it to your student loan servicer.
For mandatory forbearance applications, complete the form that matches your situation, such as the Student Loan Debt Burden Forbearance Request, Medical/Dental Residency Forbearance Request or AmeriCorps Service Form.
All forms are available on the Federal Student Aid website. Send the form to your loan servicer, along with documentation to back up your claim.
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Do I Need To Request This Extension To The Payment Pause
No. Unless you previously requested to resume repayment, you dont need to take any action to receive the payment pause extension on your eligible loans. Your payments will be paused automatically through January 31, 2022. Please call us if you previously opted out of the administrative forbearance and wish to pause payments. You can always check your loan status by logging in to your account.
We will contact you to remind you when you will need to start making payments again. Pleaselog in to your account and visit your Profile page to ensure your contact information is up to date.
Note: You can request to have this payment pause shortened at any time. Alternatively, you can explore your repayment and deferment options online by logging in to your account go to Repayment Options.
When Does The Forbearance Period End
The pause on payments ends on Jan. 31, 2022. Borrowers will be expected to make monthly payments toward their debt balances from Feb. 1, 2022 and onward.
However, keep in mind that not all loan payments are due on the first of each month. For example, your payments may have been due on the ninth of each month. You’ll want to contact your loan servicer to double check the date your payment will be due each month.
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Biden Admin Extends Student Loan Payment Pause Through January
The Biden administration on Friday extended student loan debt relief for Americans by continuing a pause on payments through the end of January 2022.
The Biden administration will relieve Americans from paying their federal student loans through the end of January 2022, extending the pause for the last time as the government seeks to keep the economic recovery rolling.
The move continues the suspension of payments for all loans owned by the Education Department, maintaining a 0% interest rate for the loans and keeping in place a freeze on the collection of defaulted loans. Loan payments will begin coming due again on February 1.
All of the loan measures, first adopted in March 2020, were to expire at the end of September. The administration intends for this to be the final extension of the protections and announced the extension Friday to give certainty to borrowers and loan servicers alike, a person familiar with the matter said on the condition of anonymity to preview the plan.
The announcement gives servicing companies who process payments for the Education Department more time to prepare for the influx from borrowers. In all, 41 million borrowers benefited from the interest rate freeze, including several million current students.
What If Im Still Experiencing Difficulty At The End Of My Forbearance
We strongly encourage you to explore your long-term options as soon as possible. There are several existing programs for economic hardship and unemployment that may be more advantageous than forbearance. You can apply for many of these options online. Just log in to your account and go to Repayment Options in the left menu.
You may also be eligible for a standard hardship forbearance for a longer period of time, but note that all normal terms and conditions would apply. Call us at 888-272-5543 if you need assistance navigating your long-term options or to discuss whether you are eligible for a forbearance.
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Ways You Can Quit Paying Your Student Loans
If you fantasize about running off to a foreign country or faking your own death just so you wont have to pay back your student loans, know that theres a real way out.
Actually, there are eight ways, and theyre all perfectly legal.
Changing Your Student Loan Payments Before Autopay Resumes
If your autopay resumes again in February and you dont have to worry about loan servicing changes, it may still be a good idea to check in with your servicer about your monthly payments, to make sure that you will be able to afford them.
For borrowers who were on an income-driven repayment plan, your payments will likely be based on your most recent income recertification. That could be as far back as late 2019, if you havent re-certified your income since then. If your income or financial circumstances have declined since that time, you may want to consider requesting a recalculation of your monthly income-driven payment based on those changed circumstances, before payments resume in February. Otherwise, a substantial payment may be automatically withdrawn from your bank account.
For borrowers who were not on an income-driven plan when the payment pause began, but whose financial circumstances have nevertheless declined since March 2020 , you may want to consider alternative repayment plan options, including income-driven repayment plans, before automatic payments resume.
And remember borrowers can opt out of autopay and manually make their payments each month.
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If You Have Ffel Loans
If you have Federal Family Education Loans , you are entitled to receive the no-interest forbearance only if the government owns the loans. This wont be most FFEL borrowers most of the loans from the now-defunct program are commercially held.
You can find out who owns your loans by logging in to studentaid.gov using your FSA ID.
The only way to get the forbearance for commercially held FFEL loans is to consolidate your debt into a new direct loan. But there are downsides to consolidation:
Your repayment term will be extended.
Your interest rate will increase slightly.
Any unpaid interest will capitalize and be added to the total amount you owe.
Temporary interest-free payments may not be worth those additional long-term costs.
Plus, if youre already making payments on an income based repayment plan, those previous payments will no longer count toward forgiveness. Youll have to start all over.
Consolidation can make sense if you have FFEL loans and want to qualify for Public Service Loan Forgiveness. Otherwise, stick with your current loans.
If you’ve experienced a change in income, you can enroll in IBR or recertify early, if you’re already on this plan. IBR will still take into account your spouses income. Your loans are also eligible for unemployment deferment, which may make sense if youve lost your job but expect to start working again soon.
How To Apply For Student Loan Deferment
To be eligible for student loan deferment, you must meet one of the following criteria:
- You are unemployed or unable to find a full-time job.
- You are experiencing an economic hardship or are serving in the Peace Corps.
- You are on active-duty military service.
- You are undergoing cancer treatment or have completed treatment within the past six months.
- You are enrolled in an approved rehabilitation training program for the disabled.
- You are enrolled in an approved graduate fellowship program.
Deferments are not automatic. To request a deferment, you must complete the appropriate deferment request form, such as the Unemployment Deferment Request, In-School Deferment Request or Economic Hardship Deferment Request. Youll send the appropriate form and documentation showing you meet the eligibility requirements to your loan servicer for review.
If you dont qualify for deferment, you might still be able to pause monthly payments through student loan forbearance.
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How Much You Need To Repay
Verify your loan or line of credit contract to figure out the following:
- the total amount you owe
- the interest rate that will be applied to your debt
- how youll repay your debt
- how much youll pay
- how long it will take to pay back your debt
Contact the organization that provided your student loan or line of credit if you dont have the information listed above.
Mandatory Federal Student Loan Forbearance
Unlike a general forbearance, which is at the discretion of your loan servicer, you must be granted a mandatory forbearance if you qualify and request it. Each type of mandatory forbearance has its own form and required documentation. Conditions under which you may qualify include :
- Qualification for partial repayment of your student loans under the U.S. Department of Defense Student Loan Repayment Program
- Activated service in the National Guard when it doesnt provide for a military deferment
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If You Declare Bankruptcy
If you declare bankruptcy, you still have to pay your OSAP loan. This means you must continue to make a regular monthly payment.
Apply to the Repayment Assistance Plan if you cant make these monthly payments.
If youve been out of studies for more than five years, you can ask a bankruptcy court to have your OSAP loan included in your discharge. Contact your bankruptcy trustee for help.
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Statement By President Joe Biden Extending The Pause On Student Loan Repayment
On my first day in office in January, I directed the Department of Education to pause federal student loan repayments for millions of Americans through September. The pause has been a critical lifeline so they dont have to choose between paying for basic necessities or their student loan during the pandemic that upended their lives.
As todays jobs numbers show, we have the tools that will allow us to beat COVID-19 and keep our economy recovering at a record rate. But we know there is more work to do and the road will still be long for many people especially for the one in six adults and one in three young people who have federal student loans.
Thats why today, my administration is extending the pause on federal student loan repayments one final time until January 31, 2022. This will give the Department of Education and borrowers more time and more certainty as they prepare to restart student loan payments. It will also ensure a smoother transition that minimizes loan defaults and delinquencies that hurt families and undermine our economic recovery.
Department Of Education Customers Here Are Some Ways To Help Get Ahead
Save yourself a headache and make sure you can log in without issue.
While youre there, update your contact info if it should change.
Take advantage of the 0% interest rate and make payments to pay down your principal balance saving you money in the long run.1
Your future self will thank you!
Questions? Log in to use CORA.
Let CORA, our Customer Online Resource Assistant, powered by AI help answer questions on loan details and explore your options. Or log in to schedule a call back. Just log in, go to Repayment Options, and pick a day and time.
Use our automated phone system
to get the info you need in text or email including payoff amount, forms, Current Balance, and more.
Federal Student Aids coronavirus information page is located at StudentAid.gov/coronavirus. The page includes information for students, borrowers, and parents about the 0% interest rate and payment pause. These relief measures are available to student loan borrowers with federal student loans owned by the U.S. Department of Education. Please visit the page regularly for updates.
Tip for Navient customers: You can easily identify if you have federal student loans owned by ED on the Account Summary page after logging into your online account at Navient.com.If youre unsure of who owns your loan, go to your Loan Details for each loan and scroll to the bottom to find the Current Owner.
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Is Student Loan Forgiveness Likely When The Payment Pause Ends
Probably not. While some legislators have gone on record in favor of forgiving a certain amount of federal student loan debt per borrower, the Biden administration has not taken any steps in this direction and has given no indication that it will do so. Borrowers should be ready to start repaying their loans when the pause ends on January 31, 2022. In the case of continued financial hardship at that time, borrowers should contact their loan servicer to inquire about requesting an individual deferment or forbearance.
For more information, visit the Federal Student Aid website.
1) U.S. Department of Education, 2021