‘Tis the Season… for Extensions!
Well, the holidays are upon us… but as has been the case this year more than any in recent history, the student loan marketplace has NOT taken a Holiday. As a result, we have some updates for you:
First and foremost, it’s safe to assume we’re not talking about hair extensions in the subject line. In light of economic pressure from the Omicron variant, Biden just announced a 90-day extension of the pause on student loan repayment and interest, which now expires May 1, 2022. This was somewhat unexpected as the White House said as recently as December 13th they were not going to extend the deadline.
As with the past extensions, this “administrative forbearance” will continue to count towards both PSLF and Income-Driven Repayment forgiveness. Therefore, we see no reason to make voluntary payments during this time. Additionally, you don’t need to recertify Income-Driven repayment plans until next year, unless you’ve experienced a loss or reduction of income.
FedLoan Agrees to One Year Contract Extension with Department of Education
Earlier this year, FedLoan and Navient announced they were not renewing their contracts to service Federal loans, impacting nearly 40% of all borrowers. Thankfully, FedLoan announced last month they extended their contract through December of 2022; Navient has also extended. This is welcome news as the idea of service transfers while PSLF is overhauled (more on this next) and CARES benefits end was increasingly feeling like a powder keg full of administrative issues.
Updated Guidance on the PSLF Limited Waiver
We’ve received guidance on a couple of previously “sticky” points related to the recent PSLF overhaul. You can read our greater summary HERE, but a couple of updates:
- ANY payment on FFEL and Direct Loans counting towards PSLF, which previously did not, ended on 9/30/2021. As of that date, now, and moving forward, you must be in a qualifying repayment plan under the original PSLF rules. If you’re not sure if you’re CURRENTLY in a qualifying plan,, you’ll want to dig into this as soon as possible.
- If you made qualifying payments in the past on FFEL or Direct Loans, and then consolidate those loans with loans on which you’ve made less, or no, qualifying payments… the NEW consolidated loan will have the MAXIMUM number of payments on any of the underlying loans applied to it. We’ll be guiding our clients to take advantage of this when applicable through 10/31/2022, when the waiver ends.
Were you preparing to refinance next month? It still may not be a bad idea.
We know that many borrowers were riding out the payment halt and preparing to refinance when the CARES benefits expired. While three more months of 0% and no payments is a nice perk, recent economic events (namely inflation) caused the fed to recently consider moving up rates hikes to 2022. Rates are still near record lows, so if you don’t wanna kick the can down the road anymore and are anxious to move forward with repaying at the lowest rates possible.
Oh… and Happy Holidays! We are grateful for your continued trust, and look forward to bringing you more resources and good news in 2022!