On April 6, 2022, the Biden Administration announced that the U.S. Department of Education will extend the suspension of most federal student loan payments through August 31, 2022. Payments were set to resume on May 1, 2022, after being on hold since the beginning of the COVID-19 pandemic. This is the sixth time the moratorium has been extended in the last two years.
Borrowers will have their payments automatically suspended without penalty or interest accrual. Collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans are also paused through August 31, 2022. One new benefit not included along with past payment suspensions is that millions of borrowers who defaulted on their federal student loans will have their loans restored to good standing, and delinquencies will be cured.
But if this temporary reprieve isn't enough and you still need help with your payments once the suspension ends, you might be able to get a more permanent solution by requesting a deferment or forbearance, changing your repayment plan, or looking into whether you might qualify for loan forgiveness.
The payment pause applies to Federal Direct Loans and Federal Family Education Loans (FFELs), but only FFELs that the U.S. Department of Education owns, not nondefaulted FFELs that other entities hold. Borrowers with Perkins Loans held by entities other than the Department of Education and nondefaulted HEAL loans also aren't covered.
Private student loan borrowers don't get relief either. (If you have private student loans, call your lender to see if any alternatives are available.)
Interest won't accrue on a loan for which payments were suspended. You also won't be charged late fees or penalties for nonpayment.
Collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans are also paused during the suspension period.
Suspended payments will count as qualifying payments for the purposes of student loan forgiveness programs, including Public Service Loan Forgiveness and income-driven repayment plan forgiveness.
You can choose to continue to make your payments. Because the interest is set at 0% during this time, the full amount of the payments will go toward paying down the principal due on the loan. So, making payments during the suspension is a good opportunity to reduce your overall student loan balance if you can afford to keep paying.
If you're worried about making your federal student loan payments after the suspension ends, consider applying for a deferment or forbearance, changing your repayment plan, or finding out whether you might qualify for loan forgiveness.
With a deferment, your loan payments are postponed for a set amount of time, up to three years in the case of an economic hardship. No interest accrues on subsidized loans, including Federal Perkins Loans, Direct Subsidized Loans, Subsidized Federal Stafford Loans, the subsidized portion of Direct Consolidation Loans, and the subsidized portion of FFEL Consolidation Loans.
With a forbearance, your loan payments are postponed or reduced, and interest normally continues to accrue.
You could also find out if you qualify for a repayment plan that will reduce your monthly payments. Income-driven repayment plans, like the Pay As You Earn Repayment Plan (PAYE), Revised Pay As You Earn Repayment Plan (REPAYE), Income-Contingent Repayment Plan (ICR), and Income-Based Repayment (IBR) Plan, are available for federal student loans. If you're eligible, your monthly payment is based on 10-20% of your discretionary income, and the remaining balance is forgiven after you make 20-25 years of payments.
While many repayment options are available to federal student loan borrowers, the trick is figuring out which you can choose from and, of those, which is best for your situation. To find out which types of loans qualify for each of the repayment options, and learn about eligibility criteria, see the U.S. Department of Education's website. To apply for a different repayment plan, go to StudentAid.gov/idr, click on "Apply Now," and then start the application by clicking on the button next to "Recalculate my monthly payment."
If you're eligible, you can eliminate your federal student loans through a loan cancellation program, like Public Service Loan Forgiveness (PSLF) or borrower defense to repayment. To qualify for a particular program, you'll have to meet specific criteria, take certain steps, and meet various conditions.
To learn more about repayment options for federal student loans during the coronavirus national emergency, visit the U.S. Department of Education's Federal Student Aid coronavirus website. You can also call your loan servicer. If you have a Federal Perkins Loan, contact your school.
To get assistance in dealing with your servicer or to get help understanding the different repayment, deferment, forbearance, and forgiveness options for federal student loans, consider consulting with a student loan attorney or debt negotiation attorney who deals with student loans.