The student loan marketplace continues to dominate headlines, and another major announcement came just today. In light of the rapid expansion of the Omicron variant, the U.S. Department of Education just announced a 90-day extension of the pause on student loan repayment, interest, and collections through 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, we expect this “administrative forbearance” will continue to count towards both PSLF and Income-Driven Repayment forgiveness. Therefore, we see no reason for borrowers of federal student loan debt to make voluntary payments during this time. Additionally, borrowers won’t be expected to recertify their Income-Driven repayment plans until next year as well. Unless you’ve experienced a loss or reduction of income, there’s no need to take action.
FedLoan Agrees to One Year Contract Extension with Department of Education
Earlier this year, FedLoan, Navient, and Granite State all announced they were not renewing their contracts to service Federal loans. FedLoan was easily the most notable of these companies, as they service roughly 8.5 million borrowers. That created quite the stir back in October, especially with the end of the payment pause drawing near and the announcement of the PSLF Waiver and Overhaul. We were pleased to hear FedLoan announce on November 10th that they had extended their contract through December of 2022. The purpose of this extension is to facilitate a smooth handoff of all accounts to their new servicers. We know that FedLoan accounts will go to different servicers as opposed to one company. We do not yet know, however, who will handle the accounts flagged as PSLF candidates. We suspect a single servicer will get all of those, but this is an educated guess. Stay tuned to this blog for more information.
Were you preparing to refinance next month? It still may not be a bad idea.
We know that many of you were preparing to refinance when the CARES benefits expired. While three more months of 0% and no payments is a nice perk, recent economic events have increased the risk of rates rising sooner than previously expected. The record-low rates we saw over the last year have recently begun to rise, with 15 and 20 year terms particularly active. On average, rates are still lower than they were pre-pandemic, and definitely lower than the 6-7% rates on Federal loans. But inflation has caused the fed to consider rate hikes sooner than previously expected.
So if you don’t wanna kick the can down the road anymore, now may still be a great time to refi. We can help you weigh your options, run savings projections, and locate the best offers in the marketplace. Best of all, we do it all at no cost to you!
Lastly, we will continue to provide updates via these newsletters, but we also encourage you to follow us on social media where we are posting weekly. Links are at the bottom right of this page.
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.