What to Expect as Education Department Gets Ready to Resume Student Loan Payments -
"After nearly two years of pausing student loan bills, the U.S. Department of Education is trying to figure out how to start collecting the payments again."
Why this is important: On Mach 13, 2020, near the beginning of the pandemic in the U.S., the CARES Act included a pause for all federal student loans. Nearly 90 percent of student borrowers accepted “the option of pressing the pause button on their” student loans. Thus, the U.S. Department of Education ceased loan payments, applied a 0 percent interest rate, and stopped collection on defaulted loans (including garnishments). For over 19 months, that pause has been extended. However, that is about to change – student loan payments begin normal repayment terms in January 2022. And, compounding the complexity, nearly 16 million borrowers (of the 24 million borrowers that paused payments) will either be restarting or soon remitting payments to a new loan servicer. Borrowers should ensure that contact information is current and, if hardship may occur due to the upcoming payment restart, should proactively be prepared to contact their servicers for assistance, options, and, potentially, more time. Servicers should review policies and procedures and begin preparing now for a potential deluge of borrowers seeking information and assistance.
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