Still owe a student loan? 5 things you need to know for 2022
Editor’s Note: This story originally appeared on The Penny Hoarder.
The past year has been a season of change in the student loan industry, including the fourth extension to freeze student loan payments.
Service agents and borrowers took its toll in 2021, ranging from changes in FAFSA applications to the removal of student loan officers from the company to an overhaul of the public student loan cancellation program.
With all the changes to student loans, it can be difficult for borrowers to keep up with everything they need to know.
This is what we are here for. We’ve put together what you need to know about student loans in 2022.
1. Payments increase again in May
Student loan repayments are expected to start again on May 1, 2022.
At the end of December, President Joe Biden extended the student loan payment break until April 2022. This has been useful for many borrowers who may have struggled to find regular work and repay debts during the ongoing pandemic.
The automatic student loan forbearance program was part of the CARES Act, the COVID-19 relief plan passed by Congress in March 2020.
With the omicron variant raging in late 2021, the extension will give borrowers more time to regroup as they attempt to recover from the financial impact of the pandemic.
According to a survey By the Student Debt Crisis Center conducted before the latest hiatus extension, 89% of fully employed student loan borrowers said they were not financially secure enough to resume payments in February. Now they have 90 more days.
With the extension, borrowers may want to take advantage of The Penny Hoarder’s advice on how to prepare for this issue. student loan debt repayment.
2. Changes in the student loan service industry
The past year has been very eventful for the student loan management industry. About 15 million borrowers were affected when student loan officers like FedLoan, Granite State and Navient have decided to withdraw from the maintenance business.
The timing certainly could have been better. With the payment hiatus underway, adding service changes only complicates what would already be a difficult situation for services and borrowers when payments resume in May.
The logistics involved in moving accounts from millions of borrowers to new providers will put the industry to the test.
If you don’t know who your new repairer is, log on to Studentaid.gov and search for the “my services” section. If you don’t know how to log in, call the Federal Student Aid Information Center at 1-800-433-3243.
3. Public service loan forgiveness program
In the past, the federal pardon program has been plagued by miscommunication and conflicting information from officials and the US Department of Education.
That said, the DOE announced at the end of 2021 that 550,000 borrowers will benefit from an “accelerated remission” as part of an overhaul of the loan forgiveness.
This meant automatic forgiveness of student loans for tens of thousands of people.
This is (fingers crossed) great news for borrowers who work in the public sector, are veterans, or have a qualifying disability. Driven by the pandemic, the DOE has promised to do “Transformational changes” to the program that would bring these hundreds of thousands of borrowers closer to forgiveness.
Will the DOE really follow? Stay connected in 2022 and the years to come.
4. Changes to the FAFSA Application Form
The FAFSA (short for Free Application for Federal Student Aid) form is notoriously difficult, confusing, and time consuming. So it was good news for potential borrowers when in 2021, the Federal Student Aid Office announced upcoming changes to the form.
For 2022, however, these changes appear to be mostly cosmetic.
The only significant changes will be that having a drug conviction or not registering with the Selective Service System will no longer affect a potential borrower’s ability to apply for financial assistance, although these issues will remain. on the form in 2022.
The FAFSA form for the 2022-2023 school year is currently available with a deadline to apply for federal assistance of June 30, 2023. vary by state.
If you need help filling out the lengthy form, check out The Penny Hoarder’s step-by-step guide to how to complete FAFSA.
5. Retirees will continue to face student loan debt
Student loans are no longer just for traditional college-age children. At the end of 2020, borrowers aged 50 or older held about 22% of the country’s $ 1.6 trillion student debt burden, reports the AARP.
This is a surprising number which only underscores the growing and continuing costs of public education over the past decades. This money may be owed to their own education or to helping their children with their college education.
With this, retirement can seem out of reach for someone in their 50s or 60s who still faces heavy student loan debt. But there are options, including:
- Avoid refinancing federal student loans.
- Lower federal payments with income-tested reimbursement.
- Choose income-based repayment for Parent PLUS loans.
- Pay off your private loans as much as possible.
- Ask about student loan forgiveness if you have a disability.
- Have a difficult conversation with your children, asking them to contribute more.
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