How to prepare for the return of federal student loan payments in 2022


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Federal student loan payments, which have been on hiatus since March 2020, are expected to resume after January 31, 2022.

Many borrowers have become accustomed to having more money in their budget since they haven’t had to make monthly student loan payments for over a year and a half. As these payments resume, some borrowers may need to readjust their spending and savings in order to pay that extra bill. And in some cases, it can be easier said than done.

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Select spoke to Mary Jo Lambert-Terry, Managing Partner at Yrefy, a private student loan lender, for advice on how to prepare to restart your student loan payments. Here are 10 steps you can take to prepare for success:

1. Make sure you know who your loan manager is

In recent months, some federal student loan officers have chosen not to renew their contracts with the US Department of Education to handle loan repayments. This could mean that you will not send your monthly payments to the same agency as before the pandemic. Instead, you will be reassigned to a new loan manager and it is important to know who it is.

“The first thing borrowers should consider is who their loan manager is currently,” says Lambert-Terry. “This information can be found at This piece is essential, as it is always good to get acquainted again with who you need to send payments to and what the payment amount is.”

If your service agent has changed, you should receive a letter in the mail regarding the change.

2. Update your address if necessary

Many people have moved at some point during the pandemic, and will need to make sure their loan officer has their most up-to-date shipping information, so that you receive your monthly bills and other communications.

If you need to update your address, you can go to the, click on your profile and update your personal information with your new address and phone number, says Lambert-Terry. Alternatively, you can go directly to your loan officer’s website and update your information there.

3. Check the minimum amount you have to pay

“You want to make sure that you are setting yourself up for success, so you will need to know how much minimum monthly payment you had before the pandemic and how that fits into your lifestyle right now,” Lambert-Terry says. “Finding out how much you need to pay can help you determine if it’s still within your budget and what your other options might be if it’s not. “

If your circumstances have changed and the minimum required payment is a little too high, one option to consider is to take out an income-based repayment plan. With this payment plan, your minimum required payment depends on how much money you earned that month, so you can avoid having to pay an amount that could break the bank. budget.

4. Examine your budget to make sure you can afford the payments.

For many borrowers, the suspension of payments has changed the way they spend and save money. Some people may have been able to fill their savings with money they would otherwise have spent on their debt. Others may have found it easier to relocate or move to another living space with the extra space in their budget.

Some of the lifestyle changes you made during the pandemic can affect how much you can comfortably afford to start paying off your debt. So it’s a good idea to take a look at your spending over the past few months to determine how much of a monthly student loan payment can fit into your financial plan.

It can be as simple as going through bank statements and jotting down your highest expense categories, or leaving a budgeting app like Mint or Personal Capital do the legwork for you. Once you’ve connected your bank account, credit cards, and student loan account to the apps, they’ll track your spending, savings, and debt payments all in one place.

5. Update your automatic payments registration.

Before the pandemic, it might have been easier to just set up automatically pay off your student loan debt so you don’t have to think about manually sending payments every month. But there are some circumstances where automatic monthly payments may not be right for you.

For example, you might previously have a regular salary every month, so you could automatically pay the same amount every time, but now your income varies from month to month and how much you can afford. paying for your loans will be different. every time. Or maybe you just can’t afford your monthly payments at all. In these cases, it’s crucial that you remember to opt out of your automatic payment settings so that payments you can’t afford aren’t taken from your account.

If you turned off automatic repayment while the loans were on hold and you can pay your payments, be sure to turn this setting back on so you don’t accidentally miss your first payment.

6. Contact your loan manager if you are unable to make payments.

“Contact your repairman and have this conversation [now], so you know what your options are, ”Lambert-Terry said. “If, for example, you are currently unemployed, one option you may have is deferral of unemployment. This allows you to defer your loan repayments for up to an additional 36 months. “

7. Make the necessary adjustments to the repayment plan to which you are registered.

“There are different types of repayment plans, and there are options for each of them when it comes to getting yourself into a payment program that you can actually afford,” Lambert-Terry said.

The foreground is a Standard repayment plan, where your payments are broken down into fixed amounts, or even monthly, until the loan is paid off in about 10 years.

The second plan is a phased repayment plan. With this option, your monthly payments start off low and gradually increase every two years or so to help you pay off your loan in about 10 years.

The third plan is an extended repayment plan, which gives you the option of making fixed or progressive payments over 25 years instead of 10 (keep in mind, however, that in order to qualify for this plan you will need to have a loan balance over $ 30,000).

The website features five additional repayment plans, which you can refer to when talking to your loan officer about which option is best for you.

8. Consider federal consolidation programs if necessary.

“If you have multiple loans and want to reduce it to one payment, there are federal consolidation programs available,” she says. “So if you have graduate loans and undergraduate loans, you can do a consolidation federally, and that will lower your monthly payment and extend your term, and you won’t have a prepayment charge to pay off. the loan sooner. “

9. Consider refinancing your federal loans at a lower interest rate

Once payments resume, the interest rate you paid on your pre-pandemic loans will be the interest rate you continue to pay. For some people, high interest charges can make it difficult to feel like they’re making progress on paying off their balance.

Refinancing allows you to swap your current loan for a new loan with a lower interest rate. Companies like SoFi and Earnest have options for those who wish to refinance their loans.

While your monthly payments may be lower, when you refinance your federal student loan becomes a private loan and you won’t be entitled to any of the same protections you get with federal student loans. For example, the federal loan allows you to request payment break periods for a multitude of circumstances, including the start of higher education and unemployment; with private loans, however, you must continue to make payments under these circumstances.

10. Don’t ignore your next payment date

One of the worst things you can do when federal student loan payments resume is to take a passive role in the process. You want to make sure that you receive accurate, up-to-date information on where to send your payments and how much you’ll need to pay each month. And you also don’t want to wait until the very last minute to let your service agent know that you won’t be able to make your payments in full each month.

“Be proactive and consider what your options are right now,” Lambert-Terry warns. “We are encouraging people to look at this now, because the closer we get to January 31, 2022, the busier repairers will be.”

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Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.


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