We’re not far away from 2022, and the new year will bring certain updates for those individuals who have borrowed money to pursue higher education. If you are one of those debtors, you should know about what’s likely on the horizon in this regard. We will cover three changes or updates you can expect as the calendar ticks over to 2022.
More Targeted Student Loan Forgiveness is Possible
There are many financial matters that each person is obligated to handle themselves. For instance, you’re expected to figure out the best way to consolidate credit card debt or pay your rent or mortgage every month. However, there are some financial areas where an increasingly vocal segment of the public wants the federal government to intervene, and student loan forgiveness definitely qualifies.
During Joe Biden’s presidential campaign, he expressed an interest in helping with student loan forgiveness if such a plan proved to be economically viable. When he was elected, he started to use executive action to cancel some debt. His administration has already canceled close to $10 billion in loans over the past eight months.
President Biden is using programs that already exist to do this, such as Total and Permanent Disability Discharge and the Borrower Defense of Repayment initiative. While this has helped some borrowers, many more are still struggling with debt, and they are clamoring for further aid on this issue.
2022 could very well see the federal government cancel student debts more aggressively. Biden might look into revitalizing the Public Service Loan Forgiveness program, or he may end up simply creating new programs for forgiveness.
Changes in Student Loan Servicing
In 2022, those with student loans might also see some distinct changes in loan servicing methods. This year, two enormous entities, Granite State Management and Resources, and FedLoan Servicing, stated that they would not renew their existing service contracts with the Department of Education. These contracts expire this December.
This means the Biden administration will need to come up with a new student loan servicer for about 10 million borrower accounts. If you’re someone who has one of these outstanding loans, prepare for student loan servicing changes. What’s not certain is precisely what those changes will resemble or how much they will impact you.
At the moment, the best thing you can do is to download and save any relevant student loan records and update all of your contact information. The service changes might not end up being that big of a deal for you, but only time will tell.
The Conclusion of the Student Loan Pause
The third update for student loan borrowers in 2022 is that the Biden administration will likely do away with the extended student loan payment pause that has been in effect for several months. The pause was put in place because of the pandemic and its economic impact. It effectively halted student loan payments and also suspended interest accruing on student loan debts. It mandated a collections moratorium as well.
At the moment, January 31st, 2022, is when the latest extension of the “pause” will expire. President Biden has made statements indicating that he will not extend it any further.
This means that in February of 2022, millions of student loan borrowers will have to start paying again. This is less than ideal if you have been a beneficiary of this respite, but at least you know when you’ll need to start paying again, so it should not blindside you.
Keep Abreast of the News in this Area
If you’re an individual living with a student loan, it’s not a bad idea to try to stay on top of any developments in this area as the new year approaches. If any student loan changes occur beyond the ones we mentioned, you should aim to be the first to know.