With the forbearance deadline fast approaching, it’s not surprising the one question on every borrower’s mind right now is â€˜Will the government extend student loan relief past May 2022′?
After all, there have been several extensions over the past two years since the pause was first initiated. This, after administration officials have repeatedly emphasized that the next extension would be the final one. So another student loan relief extension is not entirely inconceivable.
However, nobody is 100% sure at the moment what the future holds. There’s definitely a lot of pressure on President Biden to extend student loan relief past May 2022. Some even want him to forgive student loans altogether. However, this is no easy decision.
For federal loan borrowers, a lot hinges on what the federal government decides to do next with regards to student loans.
Why Would The Government Consider Extending Student Loan Relief Yet Again?
To understand this better, we need to go back to when the CARES act was first passed. The CARES act was introduced in March 2020 to offer relief to all federal student loan borrowers. The COVID-19 pandemic and the subsequent stay-at-home measures impacted almost everybody’s livelihoods. Under these circumstances, most borrowers would have found it impossible to afford their repayments.
In an attempt to offer relief to borrowers, the CARES act suspended federal student loan payments with effect from March 2020. Federal student loan interest was also frozen and all collection efforts on defaulted federal loans were stopped during this period. The legislation original contemplated a 6-month forbearance. However, as the pandemic and the associated economic fallout persisted, the student loan pause has been extended multiple times for a few months at a time.
May 01, 2022 is the latest date for the extension to end. Regular monthly repayments will begin from that date for all student loan borrowers. But the question of will they extend student loan relief is still at the top of everyone’s mind. There’s good reason for that.
President Biden is under pressure from several senators, civil rights organizations, and consumer protection groups to extend student loan relief past May 2022. They argue that the country is facing another pandemic wave with the Omicron variant and record inflation has taken hold. Given these circumstances, people are still struggling and ill-equipped to resume loan repayments. For many, the payment suspension has been critical in helping them keep their head above water.
Although the pause has without doubt provided considerable relief for federal student loan borrowers, experts argue that it still isn’t enough. Many borrowers say their income has been impacted to such an extent they will never be financially secure enough to resume payments.
The hope is that the federal government will consider the adverse impact and extend college student loan relief yet again. But there’s no guarantee.
What To Do In Case Of Another Student Loan Relief Extension
If the federal government decides to extend student loan relief past May 2022, that’s great news! It gives you more time to focus on other pressing matters including health, family, and savings.
Whatever you do though, don’t blow through the money that you’ve been saving for repayments on premature celebrations. Put it to good use instead. Use the money to build an emergency fund or to pay off higher-interest debts such as credit card debt. Other options are to put the money into a high-yield savings account or invest it so it grows. That extra money will come in useful when loan repayments do resume.
The announcement to extend or not extend the moratorium is likely to be made nearer to the deadline. If there’s no further extension announced at that time, you’ll have very little time to get your finances in order to resume payments. Don’t wait till then. Finance experts advise borrowers to make plans based on the assumption that payments will resume on May 1, 2022.
How To Prepare To Resume Student Loan Repayments
Start by logging into your FSA account and check all your balances. Make a note of the total balance, monthly repayment amounts, and payment dates.
Confirm the name and contact details of your loan servicer. Many loan servicers have changed over the past two years. Check that your contact details are updated, especially if you’ve changed your phone number, email id, or residential address. All of this will ensure that the transition goes smoothly when payments resume. Otherwise you may miss important notifications that your loan servicer sends out.
Take time to budget and plan how you are going to make the payments. If you’re still struggling financially, now’s the time to explore more affordable options. Check out the income-based repayment plans, that could help lower your monthly payments and make them more affordable.
If income-based repayment plans are not an option, consider refinancing. This is a particularly good option right now as interest rates are the lowest they’ve been in years. If you refinance now you could lock in a low rate for the entire loan term, saving you a considerable amount in interest.
Final Thoughts On Extending Student Loan Relief Past 2022
A lot of people are very confident that the government is sure to extend student loan relief past May 2022. You’ll hear an equal number of people saying that it just won’t happen. These are just opinions – nobody can predict just yet whether or not it will happen.
The best thing to do right now is to be hopeful but in the meantime, get ready to start making payments from May 2022.