Personal finance

Here Are the Federal Student Loan Changes You Should Know in 2022

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Welcome back, readers!

It's 2022, and those with federal student loans can start the new year with a sigh of relief: The U.S. Department of Education instituted a few changes that could help borrowers financially throughout the year.

First, the Education Department's pause on loan repayments, interest and collections remains in effect until May 1, as does the garnishments of wages for those who have defaulted. 

In December, the department extended the pause (originally set to end Feb. 1) due to the wildly contagious omicron variant of the coronavirus. The decision was made in order to give borrowers additional time to "plan for the resumption of payments and reduce the risk of delinquency and defaults after restart." 

The pause—in effect since March 27, 2020—has been a saving grace for some borrowers, allowing them to redirect potentially hundreds of dollars in monthly payments to necessities, like housing, food or savings during the pandemic.

In addition to an extension of the payment pause, some borrowers qualifying for public service loan forgiveness (PSLF) have until Oct. 31, 2022 to take advantage of changes to the PSLF program, which the Education Department announced in October of last year.

These temporary changes include offering a waiver to retroactively count FFEL, or Federal Family Education Loans, toward the 120 payments needed for PSLF; counting any prior payment made as qualifying toward the 120 needed as long as the borrower has a direct loan; and automatically certifying employment for federal employees and military members.

That doesn't mean just anyone can apply now – borrowers still need to have worked for qualifying employers and have made 120 on-time monthly payments toward their loans. But the changes ensure that borrowers who have worked in public service jobs but have been confused by the notoriously complicated rules of the program can now qualify. 

Borrowers can find more information about the changes on the Education Department's website.

And finally, some borrowers are still making their payments during the pause because, with interest rates set at 0% throughout the pandemic, it all goes toward their principal balance. For those who want to get ahead of some of the interest, that can be a good tactic.

However, if you're pursuing forgiveness, don't make any payments right now. The months of the pause still count toward the total number of payments you need to qualify for forgiveness (that's 120 for PSLF, for example), but it's not worth putting more money toward your loans now if they will eventually be forgiven.

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