You may have heard the news – the federal student loan forbearance period has been extended again until student loan forgiveness litigation is resolved or debt is forgiven.
If you’re feeling out of the loop after reading that, here’s a quick recap of how we got here:
- COVID happened (no further explanation needed)
- Loan payments…while in a pandemic? No way.
- Federal student loan payments were suspended, without interest, until February 1st, 2022, then later extended again until May 1st, 2022, and again until September 1st, 2022, and again until December 31st, 2022.
- Now, amidst a motion to forgive up to $20,000 in student loan debt per borrower, litigation is preventing it from moving forward. As a result, payments have been paused again until 60 days after litigation is resolved or debt is forgiven. If neither happen by June 30th, 2023, payments will resume 60 days after that.
What Does This All Mean?
With President Biden’s executive action to extend the forbearance period, your federal loans will not require payments or accrue interest until 60 days after litigation is resolved or debt is forgiven, or 60 days after June 30th, 2023 if neither occur before then.
Previously, borrowers planned to resume payments on January 1st, 2023. Now, you can hang tight until an announcement is made about when payments will resume.
During this time, payments are not required. However, you can still make payments.
Let’s break down all of the options that come with this extended forbearance.
Pausing Payments
If you want to take advantage of the extended forbearance period and temporarily pause payments on your loan, you don’t need to do anything. The Education Department instructed all federal loan servicers to automatically place all federal loans into a forbearance without interest.
Continue Making Payments
If you want to continue making payments, you absolutely can. If you do, you will pay 0 new interest on your loans during this period. This will save you money in the long run. You can continue making payments as you typically would.
If You’re Behind on Payments
If you’ve been behind on payments and your loans have entered either loan rehabilitation, default, or a separate forbearance, this section is for you.
If you are currently in loan rehabilitation, the original and extended forbearance periods will count towards the nine months included in rehabilitation.
If your loans have ended up in default, the typical collections activities will be suspended until the extended forbearance period is up. You can, however, get a refund for any forced student loan payments made between March 13, 2020 and now.
If your loans were already in forbearance before this period, any interest that accrued will still be added onto your loan principal when repayment begins. No new interest will be calculated during the new forbearance period.
If You’re Working Towards PSLF
The new forbearance period won’t reverse any progress you’ve made towards the PSLF program. As long as you are continuing to work with a qualifying employer and meeting the other requirements, you are all set.
You can choose whether or not you want to make payments during the new forbearance period. If you do, however, it won’t get you ahead on payments.
If Your Income Has Changed
If you experience a shift in income and want to continue making loan payments, we recommend opting for an income-driven repayment plan. This plan will remain in effect even after the forbearance period is up.
If You Have FFEL Loans
If you have FFEL loans, you can receive the no-interest forbearance *if* the government owns the loans. Most FFEL borrowers will not qualify under this, as the majority of FFEL loans are commercially held. You can verify whether or not you qualify by logging into your studentaid.gov account.
Final Thoughts
If you are having any confusion or difficulty navigating this new information, your best bet is to reach out to your loan servicer. Ultimately, they have control over your loan and can provide the best support for your individual needs and situation.