On December 22, 2021, the suspended Student loan payments were extended again. However, that date is approaching quicker than you think. Are you ready to resume your payments?
When Are Payments Due?
According to the Federal Student Aid website, you will receive your billing statement or other notice closer to May 1, 2022. This will come from your servicer and the office of Federal Student Aid. It is a good idea to make sure your contact info is up to date. Also, you should be aware that no payments will be due before May 1, 2022. The extension covers Direct Loans and other Federal Loans owned by the Department of Education. Click here for more information.
What Does the Extension Include?
- Income-Driven Repayment Plan (IDR): if you are not making payments during this suspension period, you will not be delaying eventual forgiveness. This is also the case for those working towards PSLF or TEPSLF.
- If you are enrolled in IDR, you need to continue to check with your loan servicer and the Department of Education when it will be time to re-certify your income, as the deadline has been extended as well. However, you can re-certify at any time. So, if your income has decreased, you should re-certify sooner to be sure that you receive more affordable payments once they begin again.
- Rehabilitation Agreement: If you have entered into a rehabilitation agreement, suspended payments will count towards the required nine payments. If you have not made payments or been given credit due to the suspension, you will need to begin making payments after the suspension period ends to complete the agreement.
- 0% Interest Rate: You may have noticed that there is a temporary 0% interest rate for covered loans through at least September 30, 2021.
How Can You Make the Most Out of the Extended Relief?
- Private loans/Perkins loans: You may want to consider consolidating with the Direct Loan program However, you will want to research this fully before making this decision. You could run into potential problems or not be eligible. Click here for more information.
- Income-Driven Repayment Plan (IDR): If you are not on an IDR plan, you may want to consider switching to one. Your payments may be considerably lower through this plan.
Can I Keep Making Payments?
Absolutely. If you are able to make payments on your student loans now, you will continue making progress toward paying off your loan.
What Happens If My Loan Is In Default?
With the payment deadline extended, you should not be receiving collection calls, wage garnishments, or have money removed from tax refunds or Social Security benefits. Consider switching to a loan rehabilitation plan or taking advantage of consolidation. During payment suspension, you will receive credit towards the nine required payments to rehabilitate out of default. This could greatly reduce the cost. On the other hand, if you consolidate out of default, you may be able to take advantage of the payment suspension to begin earning credit towards IDR or PSLF forgiveness. Find out if you are eligible, as you can only use these programs to get out of default once per loan. Click here for more information.
What If I Can’t Afford to Pay?
If you are struggling with other forms of debt, you may want to consider filing for bankruptcy. Bankruptcy can reduce or eliminate your debt entirely. And, with the passing of the Consumer Bankruptcy Reform Act 2020, you can include student loans to be dischargeable through a debt-specific repayment plan.
Need More Information?
At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like you to get to know us. We want you to be sure that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case. Call us today to set up a free consultation.