The Grinch is Coming in 2022
Something tells me you maaayyyy have seen a Grinch movie or three over this past Thanksgiving, right? Everyone knows how the Grinch tried to steal Christmas. Thankfully, federal student loan borrowers don’t have to worry about that THIS Christmas. BUT- federal loan re-payments start up again as early as January 31st, 2022.
NPR shared a summary of what Richard Cordray, head of Federal Student Aid, which works with 43 million student borrowers, said in a Congressional hearing last month. I am providing the pertinent points shared in that rambling article.
As early as January 31, 2022, student loan repayments will resume. Federal student loans repayments were paused in March of 2020. That said, believe me, the devil will be in the details. In a nutshell, you must contact your loan servicing company to determine what your payment might be, if there are any options, and how to re-start any auto-draft you may have had before the pandemic.
The Public Service Loan Program is being fixed- sorta. If you will recall, there is supposed to be a loan forgiveness option for specific situations after 10 years of full-time PS employment. To qualify, you must:
Be employed by a federal, state, local. or tribal government entity or for a not-for-profit association.
Work full-time for that entity.
Have or have consolidated your loans into a Direct Loan.
Repay your loans under an income-driven plan, and
Have made 120 consecutive payments. If you were in a qualifying status before Covid-19, you will get time credits on those months you did not pay while payments were suspended during the pandemic. (Nice!)
For these important details, go to https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service. However, there’s a catch. The loan service providers are telling borrowers they don’t have the details from Federal Student Aid to help their borrowers know if they are qualified as of right now. Plan to be checking back regularly.
The Biden Administration DID signal a push towards holding for-profit colleges that went belly up personally liable for their student loans. While interesting politically, I am not sure exactly how that helps any student who borrowed money from those schools.
Then there’s the holy grail of “loan forgiveness”, the idea of wholesale loan forgiveness for 30+ million borrowers. Neither the whole enchilada of wiping out trillions in loans NOR the more modest proposal of capping it at $10,000 per student has gone anywhere in the halls of Congress. I would NEVER count on this pipe dream in planning my student’s finances.
Nevertheless, early 2022 will see the re-start of the repayments of those student loans. There will be many folks in some financial pain when repayments return.
Anyone who is heading to college, listen. Any parent or guardian of a college-bound student, listen. Remember, there are lots of ways to reduce OR eliminate your student loan debt BEFORE you get into this mess. My book, ENOUGH! The College Cost Crisis provides a buffet of ideas for you and yours to consider.
Go back and look at the complex rules that exist now for Public Service employees. Even WITH a law that has been in place, they can’t get their loans forgiven. That’s the current reality. Please don’t rack up huge debt “hoping” someone will wave a magic wand and it will disappear.
The truth is this. Your magic wand is what YOU are willing to do to stay out of college debt. Earn THEN Learn may be the most brilliant decision you could make.
Next time- a salute to a tiger mom and lone wolf all rolled into one!
Until Next Time,
All My Best,
Bonnie Burkett
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