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Welcome back, readers!
It’s 2022, and those with federal student loans can start the new year with a sigh of relief: The US Department of Education has implemented some changes that could help borrowers financially throughout the year. .
First, the Education Department’s hiatus on loan repayments, interest and collections remains in effect until May 1, as do wage garnishments for those who default.
In December, the department extended the break (originally scheduled to end on February 1) due to the highly contagious omicron variant of the coronavirus. The decision was taken to give borrowers additional time to “plan for resumption of payments and reduce the risk of default and default after restart”.
The hiatus, in effect since March 27, 2020, has been a saving grace for some borrowers, allowing them to potentially redirect hundreds of dollars in monthly payments to necessities, like housing, food or savings during the pandemic.
In addition to an extension of the payment break, some borrowers eligible for the cancellation of public service loans (PSLF) have until October 31, 2022 to take advantage of the changes to the PSLF program, announced by the Ministry of Education in October of last year.
These temporary changes include the offer of a waiver to retroactively count the FFEL, or Federal Family Education Loans, to the 120 payments needed for the PSLF; count any previous payments made as eligible for the 120 needed as long as the borrower has a direct loan; and automatically certify the employment of federal and military employees.
This doesn’t mean anyone can apply now – borrowers must still have worked for qualifying employers and made 120 monthly payments on time for their loans. But the changes ensure that borrowers who held public service jobs but were confused by the program’s notoriously complicated rules can now qualify.
Borrowers can find more information about the changes on the Department of Education website.
And finally, some borrowers are still making their payments during the break because, with interest rates set at 0% throughout the pandemic, everything is going towards their principal balance. For those who want to get ahead of certain interests, this can be a good tactic.
However, if you are looking for forgiveness, don’t make any payment just yet. The months of the break still count towards the total number of payments you need to qualify for a discount (that’s 120 for PSLF, for example), but it’s not worth spending more money on your loans now. if they end up being handed over.
What do you think of in this new year? Write to me at [email protected].
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