The most recent news on the matter of student loan forbearance suggests that the last and final forbearance extension due to the COVID-19 pandemic will end on Jan. 31, 2022. It’s worth noting that this date has been extended several times in the past, so it’s not impossible for another extension as that date approaches. However, according to the Biden administration and the Federal Student Aid Office, this is expected to be the final such extension.
In the many uncertain months since the pandemic first arrived in the United States, it has caused all sorts of economic upheaval. Because of this, many former college students have relied on the existing forbearance as a financial lifeline.
Here, we cover what will happen when this forbearance ends and payments restart, what could spark an additional extension, and the latest information about student loan debt cancellation.
How Many Times Has Forbearance Already Been Extended?
Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27, 2020, providing $2.2 trillion in direct economic aid to Americans impacted by the COVID-19 pandemic. Federal student loan forbearance, as part of the CARES Act, was first announced in March 2020 with an original end date of Sept. 30, 2020, providing six months of student loan relief.
This forbearance has since been extended four times. A month before its original end date, it was extended to Dec. 31, 2020, then in December, it was extended to Jan. 31, 2021. In January, the date was moved again to Sept. 30, 2021, and finally, in August 2021, it was extended until Jan. 31, 2022.
Assuming there are no further extensions, this amounts to a total of almost two full years of a 0% interest rate and $0 payments due on all federal student loans. Collections on defaulted loans have also been paused during this time. For many, this provided the help they needed to make it through some of the most difficult times in recent history. Many of those same individuals now need to prepare for the financial shift coming when payments start up again.
What Will Occur After Forbearance Ends?
As the forbearance period finally comes to an end, you’ll receive your first billing statement. You can expect this statement to arrive at least 21 days before payment is due. By default, your payments should be the same as what they were before the start of forbearance unless you’ve been making payments or have taken out additional loans in the interim.
Whether you’ve forgotten what your monthly payments were or if you don’t expect them to be the same, you can contact your student loan servicer to find out ahead of time how much your payments will be. It’s a good idea to do this sooner rather than later so you can plan your monthly budget accordingly.
As you prepare for student loan repayment, you should also make sure your contact information is up to date with your loan servicer. You can update this information on your loan servicer’s website and in your StudentAid.gov profile. This way, you can be sure you’ll receive billing statements and notifications in a timely manner.
If you’re still struggling financially or if your new payment amount will be more than you can afford, now is also a good time to visit the different repayment options. The U.S. Department of Education offers many different repayment plans to choose from. You can lower your monthly federal student loan payments by choosing an extended repayment plan. You can also opt for an income-driven repayment plan (IDR plan) in which your payment amounts are adjusted based on your current income and family size.
If your loan was in default and collection activity has been paused during forbearance, it will start up again when the forbearance period ends. To handle your default situation, contact your loan servicer and arrange to make payments or adjust your repayment plan so you can get back on track as soon as possible.
If You Used Auto-Debit Before the Student Loan Payment Pause
Those who used auto-pay before the pandemic might be wondering if it will start up again or if they need to contact their servicer. The answer depends on your situation. According to the Federal Student Aid Office:
- If you were on auto-debit prior to March 13, 2020, your servicer will contact you to confirm whether you want to resume auto payments. Failure to respond will stop your auto-debits.
- If you signed up for auto-debit after March 13, 2020, it will resume automatically when your first payment is due.
- If you opted out of the payment freeze and have been making auto-payments this whole time, those will continue.
What About Private Student Loan Forbearance?
The information in this article applies to federal student loans. If you have a private student loan in forbearance, you should contact the lender directly for information about what happens when payments resume. Your lender may have additional options for refinancing or deferment, as well.
What Could Cause Another Forbearance Extension?
The goal of the original forbearance was to help those with student loans during a time of financial hardship and economic uncertainty. However, the most recent extension was actually due to the fact that student loan servicers needed more time to prepare for repayment.
Senators Elizabeth Warren and Edward Markey sent a letter to President Joe Biden in July 2021 in which they described findings from a loan servicer questionnaire. The survey indicated that “servicers will need significant time to ensure that staffing and procedures are ready to provide borrowers with a high level of support.”
Warren, Markey, and others had been pushing for the final extension to last through March 2022 — making the total forbearance period a full two years — however, it’s unlikely it will be extended again. This final extension until January 2022 should provide enough time for loan servicers to get their processes on track, and there are currently no economic reasons to justify the extension for federal student loan borrowers themselves.
What About Student Loan Debt Cancellation?
Currently, there are no pandemic-related loan forgiveness programs for federal student loans. This is important to note because scammers may try to tell you otherwise. Always keep in mind that the U.S. Department of Education and your loan servicer are your primary trusted sources for information about loan forgiveness options. Getting help and finding information about your federal student loans is always free.
However, there are some student loan forgiveness options unrelated to the pandemic. There is also legislation in the works that hopes to extend forgiveness options. Current loan forgiveness, cancellation, and discharge options include the following:
- Public Service Loan Forgiveness (PSLF): Under this program, those employed by the federal government or a nonprofit organization may receive forgiveness of their remaining loan balance after making 120 qualifying monthly payments.
- Teacher Loan Forgiveness: Those who teach full time for five complete and consecutive years in a low-income school might be eligible for up to $17,500 in loan forgiveness.
- Closed School Discharge: Those who took out loans to attend a school that closed while they attended or shortly thereafter may have their loans discharged.
- Perkins Loan Cancellation and Discharge: Based on employment or volunteer service, it’s possible to get all or part of your Perkins Loan canceled or discharged.
- Total and Permanent Disability Discharge: If you have become totally and permanently disabled, you might be able to have your federal student loans discharged.
More information about student loan debt cancellation or discharge options can be found on the StudentAid.gov website. If new forgiveness options are made into law, that information will be reflected on this site. You can also contact your loan servicer and discuss your situation with them specifically.
Discover More About Student Loans With CollegeFinance.com
At CollegeFinance.com, we want to provide you with the information and data you need to understand your student loans and make informed choices. This means understanding repayment options, what to do after forbearance ends, what loan forgiveness options are out there, and what to do if you’re facing delinquency or have defaulted on your loans.
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