Michelle Singletari: The student loan exemption has been extended until January 31, 2022. Here’s what you need to know.

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The debt relief provided to borrowers of federal student loans has been extended until next year, but the Department of Education says it does not expect a new grace period.

Under the Coronavirus Relief, Relief and Economic Security Act or the CARES Act, payments and interest on federal student loans have been suspended to help people who are trying to make ends meet due to the pandemic.

Loan debt collection has been discontinued. Likewise, negative credit reporting for eligible federal student loans, which means the Department of Education reported suspended payments to major credit bureaus as if they were made on time.

Help for the pandemic was supposed to end on September 30, but the abstinence has now been extended to January 31, 2022.

Here’s what you need to know about abstinence extension.

When will I have to repay my student loans again?

If you meet the criteria, your billing pause should start in March 2020. It was supposed to last just six months, but this latest extension means payments will resume in February 2022.

It is important to keep this time frame in mind. A study by Pew Charitable Trusts last month found that 52% of borrowers affected by the pause are unsure when they will be asked to resume payments.

Pew said its results indicate that many borrowers will need help getting back to repayments.

As in the case of the initial leniency, actions to collect outstanding loans were suspended.

How likely is it that there will be another expansion?

The Department of Education emphasized that this will be the last expansion.

“This additional time and final end date will allow borrowers to plan for repayments and reduce the risk of late payments and default after the restart,” the department said in a press release.

Education Minister Miguel Cardona also indicated that this is “the last extension”, saying in a statement that the extra time “will ensure a smooth return to payment.”

The Biden administration has been forced to extend the deferral of federal-owned student loans, especially in light of the recent extension of the eviction moratorium for tenants.

According to a Pew study, many borrowers say they are still having trouble paying bills due to the pandemic. Two-thirds of borrowers who took part in a survey this spring said it would be difficult for them to pay off their student loans if the suspension ends next month.

There are also fears that with the increase in the number of cases of coronavirus due to the delta option, businesses will have to close or scale back, leading to an increase in the number of people out of work.

In a June letter to President Biden, House and Senate Democrats argued that the resumption of payments could lead to a wave of student loan defaults.

Senator Elizabeth Warren, Massachusetts, following the announcement of the extension of the pay gap; Senate Majority Leader Charles E. Schumer, New York; and Rep. Ayanna Pressley, Massachusetts, issued a statement praising the administration.

“We are delighted that the Biden administration has heeded our call for an extended pause in federal student loans, which has provided tremendous relief to millions of borrowers facing a catastrophic financial crisis,” lawmakers said.

Was it a mistake to take advantage of leniency when I could afford to make payments?

Many people need this break.

But many borrowers who were not financially affected by the pandemic continued to make loan payments because at a zero interest rate, all the money went directly to reduce the loan principal (after paying interest accrued before March 13, 2020). It was a smart money move.

Some people have taken the opportunity to pay some bills or concentrate on paying off high interest credit card debt. And that’s okay. But it was a mistake to take pay leave if you could afford to make payments and did not have other serious financial problems.

If you haven’t made the payments and can afford it, you now have more time to reduce your debt.

People working to forgive government service loans do not have to keep making payments. Under the PSLF program, the remainder of the borrower’s debt is forgiven after 120 corresponding monthly payments.

If you qualify for the PSLF, you will not be forced to suspend payments on your loan. It’s like making your monthly payments on time.

What should I do when payments resume?

The Department of Education said it will soon begin notifying borrowers of this final renewal and will provide borrowers with resources and information to resume payments.

Your service center should contact you before the grace period expires to confirm when you need to start making payments again. If you do not receive any messages, check with your service personnel to make sure you know the date of change.

During the pandemic, many people moved. You may have moved in with your parents or a family member, or moved to save money.

It is important that you contact your loan agent and update your address. Do not assume that since you have not been contacted, you are not responsible for the renewal of payments. You run the risk of accumulating late fees and possibly not even paying off the loan if you don’t renew your monthly payments.

You are responsible for the timely payment of the loan, even if the lender does not know how to find you.

You should also update your contact information on your studentaid.gov profile.

Keep in mind that if you have set up automatic payments, they may resume on the first date when the abstinence period comes to an end.

What should I do if I cannot afford to pay after a pause?

If you haven’t already, ask your loan officer about subscribing to an income-driven repayment plan, or IDR. Depending on your income and family size, according to IDR, your payment may actually be zero.

You can get an estimate of your monthly payment for various IDR plans by going to studentaid.gov.

If you have already enrolled in the plan and your income or household size has changed, you can ask for a recalculation of your payment, which can reduce your monthly debt.I received an email from a company offering to help reduce my student loan debt. It is legal?

According to the Consumer Financial Protection Bureau, here are three signs of debt scams.

• You are asked to pay upfront to help you sign up for an income-driven payment plan.

• You are promised quick debt forgiveness.

• You must provide your Federal Student Aid ID or FSA ID, which is the username and password you use to log into the Department of Education’s student assistance websites. Do not share this information with anyone.

Don’t pay anyone to do something that you can do yourself. Your loan specialist can help you choose different repayment options. And if you feel you are not getting the help you need, file a complaint with the CFPB at consumerfinance.gov.

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