Student Loan Relief Extended

After much anticipation, the temporary student loan relief was extended. Payments on student loans will not start in January 2023 as previously communicated and the loan payment freeze may be extended into the summer of 2023 subject to if and when the U.S. Department of Education is permitted to implement the debt relief program ($10k-$20k of cancellation) or the pending litigation is resolved. . That gives you a few extra months to prepare for payments to restart.

Here’s a quick reminder of the benefits of the temporary student loan relief.

No interest or payments due on Department of Ed owned loans.

All Direct loans will keep their 0% interest rate through the payment pause. This can be a good time to make extra payments if you’re not pursuing loan forgiveness.

Prepare for payments to restart by reading the post Preparing for Federal Student Loan Payments to Resume.

Non-payments of eligible loans will count toward loan forgiveness.

Both Public Service Loan Forgiveness (PSLF) and Income-Driven Loan Forgiveness (IDLF) require a certain number of payment to achieve forgiveness. All months of paused payments on eligible loans from March 2020 – the pause ends will be counted toward the forgiveness requirements. It doesn’t make sense to make payments on your Direct loans during this time period if you’re seeking forgiveness. You can ask for refunds of any payments you made. Your months of non-payment will still be counted toward the forgiveness requirements even if payments are refunded.

The PSLF Limited Waiver has significantly improved the eligibility requirements for the program. Take a look at these new rules by reading the post What You Need to Know About the PSLF Limited Waiver Opportunity. Many borrowers who’ve worked 10 years in public service while making student loan payments are receiving forgiveness and  overpayment refunds now.

Collections and credit reporting on eligible defaulted loans remain on hold.

If you haven’t rehabilitated or consolidated your defaulted student loan yet now is the time to do so. It takes nine months to rehabilitate a defaulted loan and three months for consolidation. You can satisfy some of these payments during the remaining temporary student loan relief payment pause.

If you haven’t already I recommend reading through the posts How to Fix Defaulted Student Loans and CARES Act Help for Student Loan Default.

Additional Information

Whitehouse Payment Pause Extension Statement

Federal Student Aid COVID-19 Relief Information