The current break on student loan payments is set to expire on May 1, 2022, following a series of extensions, which means that millions of federal student loan borrowers will be on the hook for monthly payments with interest for the first time since March 2020. While the U.S. Department of Education previously stated that the forbearance period would end in January, the rise of the omicron variant prompted another extension.
The latest extension was unexpected
The student loan payment freeze has been extended multiple times since March 2020, but the Education Department stated in the fall that Jan. 31, 2022, would be the definitive end of the period. As such, millions of borrowers were preparing to resume their payments in February 2022.
However, the Biden administration decided to extend the pause an additional 90 days so it could assess the impact of the omicron variant. The Education Department also stated in a press release that it would use this time to further improve federal student loan servicing.
“As we prepare for the return to repayment in May, we will continue to provide tools and supports to borrowers so they can enter into the repayment plan that is responsive to their financial situation, such as an income-driven repayment plan,” said Secretary of Education Miguel Cardona. “We are committed to not only ensuring a smooth return to repayment, but also increasing accountability and stronger customer service from our loan servicers as borrowers prepare for repayment.”
Democratic lawmakers had advocated for an extension
In early December, Sen. Elizabeth Warren, Majority Leader Chuck Schumer and Rep. Ayanna Pressley sent a letter to Biden urging an extension of the payment break “until the economy reaches pre-pandemic employment levels.”
When the administration made the extension announcement in late December, the three lawmakers responded positively to the decision in an official statement.
“We’re pleased the Biden administration has heeded our call to extend the pause on student loan payments,” the statement reads. “Extending the pause will help millions of Americans make ends meet, especially as we overcome the omicron variant.”
What student loan borrowers should expect
Federal student loan borrowers need to prepare to resume making regularly scheduled payments in May. You’ll receive a billing statement from your loan servicer at least 21 days before your first payment is due, and you may receive additional communication about the end of the forbearance period before that. You can use these final few months of the payment pause to make interest-free payments, focus on private student loan payments or pay down high-interest debt, like credit card debt.
However, if you’re concerned about making payments again in May, you have options. If you’re looking for a lower monthly payment, consider enrolling in an income-driven repayment plan or Public Service Loan Forgiveness – which has temporarily loosened its eligibility requirements through Oct. 31 – or apply for federal forbearance if you don’t have the resources to start up payments. You can also think about refinancing with a private lender if you can get a lower interest rate and you aren’t worried about losing federal benefits.