It’s a challenging time for millions of student loan borrowers. While the ongoing student loan pause has suspended payments and interest on most (but not all) federal student loans for over two years, borrowers are grappling with unprecedented confusion and uncertainty.
During the last year, there have been significant loan servicing transfers, sweeping changes to student loan forgiveness and relief programs (many of which are temporary), and ambiguous messaging from top Biden administration officials about what to expect in the coming months. At the same time, soaring inflation and rising prices are putting financial pressure on many households, leaving little room for student loan payments.
It’s a tough environment. But here’s what student loan borrowers should be doing right now.
Evaluate Student Loan Forgiveness Opportunities
The Biden administration has begun implementing multiple “targeted” student loan relief initiatives. Through these actions, the Education Department has relaxed requirements, expanded eligibility, or streamlined processing for multiple existing student loan forgiveness programs including Public Service Loan Forgiveness, income-driven repayment, and Borrower Defense to Repayment.
But many of these initiatives are temporary, and these student loan forgiveness opportunities could disappear in a matter of months. Borrowers should take the time now to evaluate their potential eligibility and, if action is required, start the application process. Here are some of the more significant student loan forgiveness initiatives:
- Limited PSLF Waiver — this initiative temporarily expands eligibility for student loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. The waiver is set to end on October 31, 2022.
- IDR Adjustment — this initiative temporarily allows many past loan periods, including certain periods of deferment and forbearance, to count towards IDR loan forgiveness. To qualify, some borrowers may need to take action before the end of 2022.
- Borrower Defense to Repayment — this program provides federal student loan cancellation for borrowers defrauded or misled by their school. The administration has initiated automatic student loan forgiveness for former students of Corinthian Colleges, and has proposed a broad settlement in a class action lawsuit that could benefit borrowers who attended dozens of other institutions. But borrowers may have to act before this fall to qualify.
- Total and Permanent Disability (TPD) discharge — this program can discharge the federal student loan debt for borrowers who are unable to maintain substantial, gainful employment due to a medical condition. The Biden administration has temporarily relaxed post-discharge monitoring requirements for approved applications.
Check Your Student Loan Servicer
While millions of federal student loan borrowers haven’t had to make payments since March 2020 given the ongoing student loan payment pause, a lot has changed within the federal student loan system. Several major student loan servicers have withdrawn, or are in the process of withdrawing, from the Department of Education’s Federal Student Aid system, resulting in more than 10 million borrowers being transferred to new loan servicers.
There have been two particularly significant student loan servicing transfers within the last year. Navient, one of the Department of Education’s major loan servicing contractors, recently transferred all government-held federal student loan accounts to Aidvantage. And FedLoan Servicing, another major contractor, has transferred millions of accounts to various other loan servicers including EdFinancial and MOHELA, which will be taking over the Public Service Loan Forgiveness (PSLF) program. These transfers are ongoing but are expected to be completed by the fall.
Borrowers can check who their federal student loan servicer is by accessing their account through the Department of Education loan portal at StudentAid.gov. If you’ve been transferred to a new loan servicer, be sure to also set up an online account to get the most up-to-date information and correspondence about your student loans.
Update Your Contact Information With Your Student Loan Servicer
A lot has changed for many people since 2020. Now is a good time to make sure your contact information is up to date with the Department of Education and your student loan servicer — you don’t want to miss important correspondence about student loan repayment or new student loan forgiveness opportunities. And most student loan contracts put an affirmative legal obligation on the borrower to always keep their contact information current.
Check to make sure that the phone number, mailing address, and e-mail address on file with your loan holder is correct and up-to-date.
Certify Your Employment for Public Service Loan Forgiveness (PSLF)
Borrowers on track for Public Service Loan Forgiveness (PSLF) — a student loan forgiveness program for borrowers working for nonprofit or government organizations — can only get credit for their payments if they submit PSLF Employment Certification forms. And borrowers only get credit up through the date of their most recent employment certification. That means that borrowers must periodically submit a new PSLF Employment Certification form to get an updated count of qualifying PSLF payments.
Now is a good time for borrowers on track for PSLF to certify their employment, given that the ongoing Covid-related payment pause can count towards PSLF, as well as the looming expiration of the Limited PSLF Waiver on October 31, 2022. You can start the process via the Department of Education’s PSLF Help Tool.
Prepare for the Student Loan Pause to End
The ongoing student loan pause, which has suspended most federal student loan payments and interest, is set to end on August 31. Advocates for borrowers have been urging the Biden administration to extend the pause yet again. But so far, Biden administration officials have not publicly announced any decision.
Now is a good time to evaluate your repayment plan options. Borrowers can run calculations using the Department of Education’s Repayment Simulator. Notably, borrowers who have been on an income-driven repayment plan will not have recertify their income until March 2023 at the earliest, according to the Education Department.