COVID Delayed Federal Student Loan Payments Are Coming Due

COVID Delayed Federal Student Loan Payments Are Coming Due

Millions of Americans have benefited from the March 2020 pause of repayment and interest accrual on federal student loans. However, the COVID-19 emergency relief will end on January 31, 2022, and the U.S. Department of Education will start collecting payments again.

In Rhode Island, the deadline will hit thousands of borrowers.

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Charles Kelley, executive director of the Rhode Island Student Loan Authority, tells GoLocal, "There's been a couple of changes that we really want to help make people aware of. During COVID, as most people know, federal loans were put on hold. So it's been close to two years where people haven't made payments on some of their federal loans or haven't been required to."

"And that all changes this February so people who have sort of forgotten about getting back on a repayment schedule with their loans should probably do a couple of things," said Kelley.

 

Public Service

Kelley said that if you work for a non-profit, are a police officer or are employed in any number of public service-focused jobs, you can get your loan forgiven and Washington has made it much easier.

"There is another issue that's very recently come out of Washington, and as you may know a public service loan forgiveness program has been in existence since 2007," said Kelley. 

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He said in the past it was very difficult to be approved, but the program has been simplified to be easier.

"Only about 2 out of 100 people that have applied for it have had some of their loans forgiven, so the U.S Department of Education -- probably recognizing that they may not be able to do general loan forgiveness -- have made some substantive changes in the requirements for those people who work for a 501(c )3 or government agencies such as teachers may still be able to get some loan forgiveness on the balance of their loans," said Kelley.

"Now generally you have to make 120 payments but it's been very much relaxed and you only have to make 120 payments, even if they were late, or partial [payments] whatever and the big one is -- remember we talked about those two years of no payments during COVID -- those months count towards 120 months even though you did not make any payments," said Kelley.

Kelley also reminded borrowers that there are record low rates and they may wish to look into refinancing their loans.

Also, remember that loan payment re-start on February 1. 

If you have questions you can contact RISLA online or call them at 401-468-1700.

 

Steps to Take 

There are four steps borrowers can take now to resume making on-time, monthly loan payments:

Step 1: Log in to the Federal Student Aid website to view information about your loans and loan servicer

Your loan servicer is the company in charge of collecting the repayment of your Federal Direct Student Loan. The United States Department of Education assigns each student to a loan servicer once the student's loan funds have been disbursed. If you don’t know who your loan servicer is or how to contact them, log in to the Federal Student Aid website or call 1-800-4-FED-AID (1-800-433-3243). There may be longer than usual wait times as repayment resumes for millions of borrowers.

Step 2: Update your contact information.

Double-check that the Department of Education and/or your loan servicer have up-to-date contact information so they can reach you. Federal loan servicers need updated contact information, so they are able to notify borrowers of any changes to their account and can provide important notices. Federal loan servicers have already started sending letters and emails with information and reminders about the end of the forbearance on January 31, 2022.

Another important reason to ensure your contact information is up to date – three federal student loan servicers are ending their agreement with the U.S. Department of Education. About 16 million borrowers will be placed with a new loan servicer and will receive notices from their new servicer by mail and email.

Borrowers may be able to update their contact information online at their loan servicer’s website or through their profile on StudentAid.gov.

Step 3: Open & Read Your Mail

Be sure to open and read your mail; it’s not all junk! Be sure to read everything sent by your student loan servicer. These important documents will tell you when your next payment is due and may also provide information about income-driven repayment plans, how to apply, requesting deferment. If your loan servicer has changed, both your previous and new loan servicers will contact you by mail with instructions on what to do.

For additional information, visit the following:

Federal Student Aid’s COVID-19 Emergency Relief and Federal Student Aid web page. StudentAid.gov/coronavirus.
The Institute of Student Loan Advisors website Freestudentloanadvice.org 

Step 4: Can You Afford the Monthly Payment?

Finally, but arguably most importantly – as soon as you are able, check your budget to see that you can afford your upcoming monthly payment. If not, borrowers should be in contact with their loan servicer as soon as possible to discuss options available, and to evaluate possible options for flexible repayment plans based on current income or additional forbearance.

Borrowers can also visit studentaid.gov and use the Loan Simulator tool to find a monthly payment plan that fits their needs. Aim to file the needed paperwork as soon as possible to avoid the rush of inquiries loans servicers may receive once repayment resumes.

Remember, your servicer may have options for flexible repayment plans based on current income or additional forbearance. Borrowers should call their loan servicer to discuss their options and provide financial and family information to demonstrate what they can afford to pay.