The national federal student loan payment pause expires on January 31, 2022. So far, the Biden administration has not given any indication that it intends to extend that student loan relief, despite widespread calls to do so. As a result, millions of federal student loan borrowers will be resuming repayment this February.
For many student loan borrowers, repayment may look much different in 2022 than it did before the student loan payment pause went into effect. Here’s what you need to know
New Biden Executive Order Will Streamline Student Loan Repayment
This week, President Biden signed an executive order directing numerous federal agencies to streamline customer service activities. The Department of Education’s student loan system is covered by that order. As part of this initiative, the Department will be implementing a new federal student loan repayment system whereby Direct federal student loan borrowers can manage their loans through a “single repayment portal on StudentAid.gov.”
According to the Department of Education, through this government portal, borrowers will be able to “apply for, manage, and repay their loans without having to visit multiple websites and manage multiple sets of credentials.” Currently, borrowers can view their federal student loan information and apply for income-driven repayment plans and Direct consolidation loans through StudentAid.gov, but little else. The upcoming expansion of features will mean that regardless of their specific federal student loan servicer, all Direct federal student loan borrowers will be able to access and repay their loans through a single portal.
“We are attuned to the needs of those we serve — including students, educators, parents and families, and communities,” said U.S. Secretary of Education Miguel Cardona in a statement. Cardona said the Department is committed “to improving access, affordability, and success in postsecondary education.”
The Department has been working on implementing this universal federal student loan portal for years, but has not yet provided a specific timeline on the expected rollout.
Self-Reporting For Income Based Repayment Plans
The Department of Education will be temporarily easing administrative requirements for borrowers applying for, or renewing, income-driven repayment (IDR) plans. IDR describes a collection of repayment plans that tie a borrower’s monthly payment to their reported income and family size. Payments typically must be recalculated annually, and are adjusted based on changes to the borrower’s income or family size.
Borrowers must usually submit either their most recently-filed federal tax return as proof of income, or they can submit alternative documentation of income such as a pay stub or a letter from their employer. However, the Department is indicating that it will provide more flexibility for at least the first half of 2022 as borrowers return to repayment. “Right now, you can self-report your income if all your loans are Direct Loans,” said the Department in mass emails to borrowers. “Apply for an IDR plan now to prepare for your payments to restart.”
Self-reporting will allow borrowers to simply self-certify their income, without necessarily going through the additional steps of providing documentation (although they still can do that). Self-reporting will make it easier for borrowers to access IDR, and will reduce the administrative burden on federal student loan servicers, given the unprecedented volume of borrowers who will be resuming repayment all at the same time after the payment pause ends in January.
Federal Student Loan Servicing Changes
While the Biden administration’s goal will be to transition most Direct federal student loan repayment operations to the StudentAid.gov website, allowing borrowers to effectively bypass their student loan servicers in many cases, most borrowers will still have to deal with their loan servicers when repayment resumes this February. And student loan servicing has been going through a bit of an upheaval during the last year, with several servicers announcing their withdrawal from the Department’s loan servicing system:
- Government-held federal student loans serviced by Navient are currently in the process of being transferred to Aidvantage, the new Direct loan servicing wing of Maximus, an existing Department of Education contractor.
- FedLoan Servicing, which currently handles the Public Service Loan Forgiveness (PSLF) program, will also be exiting the federal student loan system. Some FedLoan accounts have already been transferred to MOHELA, another Department loan servicer. Other FedLoan accounts will be transferred to other servicers later in 2022; the agency recently extended its contract with the Department of Education by another year (it had been set to expire this month).
- The Department has agreed to a two-year extension of servicing contracts with several of its other federal student loan servicing contractors including Great Lakes Higher Education, Edfinancial, MOHELA, and Nelnet.
Borrowers should check StudentAid.gov for their current loan servicer information, and contact their loan servicers to update contact information and confirm their auto-debit arrangement, if applicable.
Changes to Public Service Loan Forgiveness (PSLF)
In October, the Biden administration established the Limited PSLF Waiver program, which will temporarily ease the rules governing student loan forgiveness for employees who work for certain nonprofit organizations and government agencies. As a result of the waiver, thousands of borrowers may get closer to student loan forgiveness through October 31, 2022. While FedLoan Servicing will continue to administer the PSLF program, the Department of Education will be ramping up its efforts to review eligibility and approve loan forgiveness under the waiver program through most of the next year.
The administration has also indicated that it intends to further streamline PSLF under Biden’s executive order issued this week. According to the Department, “Public Service Loan Forgiveness candidates, including civil servants and active-duty service members, will be able to apply for the program with less paperwork than currently and without having to fill out forms with information they have already provided to the Federal government previously.” Some borrowers may eventually be able to get automatically certified for PSLF through data-sharing tools used between federal government agencies, rather than submitting annual paperwork. The Department has not provided a specific timeline for the rollout of the new PSLF benefits.
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