Is Cancellation Coming May 2, 2022?
March 31, 2022
Earlier this month, White House chief of staff Ron Klain stated that the Biden administration wants to make a decision regarding debt cancellation before resuming payments.
Payments on federal student loans are set to start in May, after being halted for more than two years due to the coronavirus outbreak. However, the Department of Education recently sent out unusual instructions to the servicers that handle its $1.6 trillion student loan portfolio stating do not reach out to borrowers regarding resuming payments May 2nd: casting doubt on the timeline.
The email did not explain why servicers should keep quiet about the deadline, and it gave no indication that it would be changed. It did, however, signal that the Biden administration is considering extending the student loan payment freeze.
The department is required by law to contact borrowers at least six times before returning to repayment. So asking servicers not to do so at a time when it is legally required implies the administration can only postpone this decision for so long.
Requiring tens of millions of debtors to resume repayments in May has significant practical and political risks.
In terms of logistics, Navient and FedLoan, two massive student loan servicers, are winding down their government contracts, forcing the Education Department to reassign millions of students to alternative servicers. This might make it more difficult for some people to acquire the aid they need to change their repayment plans or monthly payments, which is the last thing Democrats want going into an election season.
" Joe Biden is the only president in history where no one's paid on their student loans for the entirety of his presidency," Klain remarked on the podcast, apparently testing a talking point for voters who are also student loan borrowers.
All federal student loan borrowers are eager to know when, exactly, they will be expected to resume repaying their student loans. They will have to wait a little longer.
But, despite signs that the pause on student loans will be extended again, no official announcement has been made. As a result, experts say borrowers should be prepared to start paying come May. Here are the steps they say you should take to get ready.
Double-check that your servicer has your current contact information, so that you receive all the notices about the upcoming change.
Many people’s lives have been changed by the pandemic.
If your circumstances are very different than they were two years ago, review the current payment plans available to you and determine the best fit for your situation.
If you remain unemployed or are dealing with another financial hardship, and If you expect your struggles to last a while, it may make sense to enroll in an income-driven repayment plan.
If you do decide to change your repayment plan, Edapt Student Services recommends submitting that application with your servicer now.
Need assistance finding the best program? Contact us today