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Bottom Line Up Front

  • The final extension period for federal student loan payments ends August 31, 2022.
  • You may need to contact your federal loan servicer to update your contact information and set up autopay.
  • Scammers may try to take advantage of the situation—be cautious of offers that sound too good to be true.

We all know the pandemic changed a lot of things—including the timeline for federal student loan repayment. The federal student loan payment pause would have ended Jan. 31, 2022, but it was extended until May 1, 2022 due to ongoing COVID-19 struggles. Now, President Joe Biden has pushed the date forward once again. Currently, federal student loan payments will remain paused until August 31, 2022.

Approximately 41 million federal student loan borrowers have taken advantage of the pause on student loan payments. If you’re one of them, it’s time to prepare as the pause on federal student loans comes to an end. Here are 5 things you need to know.

  1. Payments restart in the fall of 2022. The CARES Act of March 2020 suspended student loan payments, froze interest and paused collections on defaulted student loans. Although the CARES Act has been extended numerous times, the extension ends August 31, 2022.
  2. Your student loan servicer may have changed. Federal student loan servicers are contractors with the Department of Education. They handle the billing, track your payments and help you navigate the loan repayment process. Several of these companies are ending their contracts with the government. If your contact information is current, you should receive notifications of any changes in your loan servicer. But, if you do mistakenly send a payment to your former servicer, your payment should get forwarded to the proper company.

    “Ensuring your contact info is up to date with your loan servicer is key,” said Brittany Mills, assistant manager of education lending at Navy Federal Credit Union. “There will likely be a lot of communications sent out to borrowers about payments, billing and more. Be proactive and make any necessary changes now so you don’t miss important updates.”
  3. Auto-debit may not be automatic. Many borrowers streamlined their federal student loan payments with autopay. This enabled their financial institution to automatically send monthly payments to their loan servicer. However, after the pause, autopay may not automatically resume. “Setting up automatic payments is a great way to guarantee you make on-time payments each month and can help you build a positive credit history,” added Mills.
  4. Scammers are on the prowl. As student loan policies change, scammers are taking advantage of the confusion. Be wary of propositions that involve paying someone to help you navigate the loan payment process. Your loan servicer will help you for free. Think twice about offers of student loan forgiveness, especially if they urge immediate action or sound too good to be true.
  5. You may be able to lower your monthly payment amount. You can contact your federal loan servicer to find out how much you’ll be required to pay each month. If the payments are more than you can afford right now, consider an income-driven repayment (IDR) plan. If you’re eligible, your payments will be calculated based on your income.

    “When looking for ways to lower your payment, prioritize all your financial goals like saving for retirement, buying a home and paying off your student loans. Then, look into what options are available to set yourself up for reaching these financial goals,” said Mills.

We Can Help

As you prepare to resume your federal student loan payments, consider refinancing your loans with Navy Federal. It’s important to review your current and future federal loan benefits before refinancing because those benefits don’t carry over. Refinancing your student loans with a private lender may lower your interest rate, reduce your monthly payments and allow you to pay off your loans more quickly.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.