Federal Student Loans Update: Administrative Forbearance Extended

On December 22, 2021, the U.S. Department of Education announced an extension of the administrative forbearance through May 1, 2022. The announcement does not indicate that this will be the “final extension” of the forbearance, which has lasted since March 2020. As a result, interest accumulation and payments will resume in May 2022 for the first time in over two years.

Here is some helpful information straight from StudentAid.gov:

• Once the payment suspension ends, you’ll receive your billing statement or other notice at least 21 days before your payment is due.
• If you’re on an Income-Driven Repayment (IDR) plan, your payment amount will return to what it was prior to your payments being suspended unless you’ve recertified since the payment suspension began.
• You will not have to recertify your income before the end of the COVID-19 emergency relief period, even if your recertification date would have occurred before the end of the relief period. As part of the payment suspension, your recertification date has been pushed out from your original recertification date. You will be notified of your new recertification date before it is time to recertify.
• Update your contact information with your servicer!

We are still waiting for more information about how the Department of Education plans to handle the transfer of loans from one of their largest servicers, FedLoan Servicing. An announcement on FedLoan’s website signals that the “transition” period could be as long as a year. “In the coming months, we [FedLoan Servicing] will be working with Federal Student Aid (FSA) to conduct a smooth transition of your loans to a different servicer over the next year. FedLoan Servicing will continue to service all loans until they are transferred to another FSA-designated servicer.”

We anticipate new contracts with new loan servicers and have seen indications from the U.S. Department of Education that there are plans for a “’Next Gen’ platform.”

Rest assured, your team at Spaugh Dameron Tenny will continue to monitor the changes with the student loan industry.

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