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Will There Be a Student Loan Forbearance Extension? All You Need to Know

Will Student Loan Forbearance Be Extended?
Nancy Bilyeau
Nancy BilyeauUpdated March 22, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Editor’s Note: Since the writing of this article, the Biden administration has extended the pause on federal student loan repayment through Dec. 31, 2022. It’s a burning question for anyone who’s paying down their student loans and on April 6th that question was answered. President Joe Biden announced another extension on the deadline for when people must resume paying their federal student loans. The repayment date for resumption of paying government student loans is now August 31st, 2022.Learning the latest and fully understanding these developments will help you make decisions on your student loans.

What Is Student Loan Forbearance? 

The word “forbearance” is a legal term — it means to refrain from exercising a legal right, such as enforcing the payment of a debt.  What student loan forbearance means: If you are granted this, you don’t have to make your loan payments, or you can temporarily make smaller payments.When they are in college, students are urged to fill out their FAFSA form and many make use of need-based financial aid. The forbearance programs exist to help people after they’ve graduated and are paying down their loans.

Types of Student Loan Forbearance

While some people may believe that forbearance only applies to the moratorium on payments of federal student loans prompted by the coronavirus pandemic, that’s not the case. Student loan forgiveness has been obtainable for years. Forbearance existed in various forms — and for lots of reasons — well before the Coronavirus Aid, Relief, and Economic Security Act or, CARES Act, was passed by Congress on March 27th, 2020.If you think you qualify for any of the forbearance programs described below, go to the Department of Education website to learn more and obtain forms.With these forbearances, you won’t have to make a payment, or you can temporarily make a smaller payment. However, you probably won’t be making any progress toward forgiveness or paying back your loan, cautions the Department of Education.Important to know: If you are granted a forbearance by the government, you are still responsible for paying the interest that accrues during the forbearance period. During a forbearance, you can either pay the interest as it accrues, or you can allow it to accrue and be capitalized (added to your loan principal balance) at the end of the forbearance period. If you don’t pay the interest on your loan and allow it to be capitalized, the total amount you repay over the life of your loan may be higher.

General or Discretionary Forbearance

Also known as discretionary forbearance, general forbearance is available to you if you can't make your student loan payments due to medical expenses, financial difficulties, employment change, or other reasons that the federal student aid office may accept. Most types of forbearance are not automatic — you’ll need to submit a request to your student loan servicer, using a form. Also, for some types of forbearance, you must provide your student loan servicer with documentation to show that you meet the eligibility requirements for the forbearance you are requesting.General forbearances are available for federal Direct Loans, Federal Family Education (FFEL) Program loans, and Perkins Loans. For loans made for all three programs, a general forbearance will be granted for no more than 12 months at a time. If you’re still experiencing hardship when time runs out, you may request another general forbearance. However, there is a limit on general forbearances of three years.

Mandatory Forbearance

For these mandatory forbearance programs, if you prove you’re eligible, your loan server has to grant a suspension of payments. The programs include:

AmeriCorps

You’re serving in an AmeriCorps position for which you received a national service award.

Department of Defense Student Loan Repayment Program

You might qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.

Medical or Dental Internship or Residency

You’re serving in a medical or dental internship or residency program, and you meet specific requirements.

National Guard Duty

You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

Teacher Loan Forgiveness

You perform a teaching service that would qualify you for teacher loan forgiveness.

Student Loan Debt Burden

The total amount you owe each month for all the federal student loans you received is 20 percent or more of your total monthly gross income, for up to three years. (This mandatory forbearance type applies to Direct Loans, FFEL Program loans, and Perkins Loans.)Aside from forbearance, the Department of Education also offers income-driven repayment plans. They set your monthly student loan payment at an amount that’s intended to be affordable based on your income and family size.

Will Student Loan Forbearance Be Extended?

The student loan forbearance — also known as a moratorium — that's been granted to people making payments on a federal loan is far different from these standing Department of Education programs. It applies to anyone paying down a federal student loan, no matter their income or career.This forbearance, or “pause,” was put into place in early 2020, when the U.S. economy was first hit by the Covid-19 pandemic. It amounted to a federal student loan payment holiday. There was a suspension of loan payments, a 0% interest rate, and a halt to collections on defaulted loans.Then there was a student loan forbearance extension in 2021. On Dec. 22nd of last year, the Department of Education extended the student loan payment pause for the second time, setting it to resume on May 1, 2022.Biden said, "To enable Americans to continue to get back on their feet after two of the hardest years this nation has ever faced, my Administration is extending the pause on federal student loan repayments through August 31st, 2022. That additional time will assist borrowers in achieving greater financial security and support the Department of Education’s efforts to continue improving student loan programs. As part of this transition, the Department of Education will offer additional flexibilities and support for all borrowers."

Will President Biden Cancel Student Debt?

A decision on whether to forgive student debt through executive action could be made before the payments resume, some political observers say. Forgiveness of the debt, or canceling it, is different than forbearance. When President Biden was running for office, he said that he intended to cancel $10,000 of student debt for those paying down federal student loans.However, President Biden has not done this so far. It is also not confirmed that a president could do this through executive action.Instead, the President has focused on improving, extending, or expanding some of the government’s existing programs. Nearly $10 billion in student loan debt has been wiped away since he took office. The beneficiaries include permanently disabled people, those who were defrauded by failed for-profit schools and soldiers sent to war zones.Some politicians feel that $10,000 across the board is too low–that holders of federal loans should get much more written off. In January 2022, a group of 80 progressive lawmakers sent a letter to Biden, asking him to cancel up to $50,000 of student debt per borrower.“We’ve got to make it easier to pay off student loan debt, and when you pay it off, we’ve got to make sure you’ve got a clean slate,” said Congresswoman Deborah Ross (D-N.C.). “Once you pay it off, you should have a clean score and be able to raise your family in a home, be able to buy a car, be able to start a business.”However, critics of a student debt cancellation say any amount granted to Americans would be unfair to people who didn’t borrow for their education or who paid off their loans while making financial sacrifices. It also would create a confusing set of expectations for those beginning their college education.The federal government is also reportedly considering options that bring defaulted borrowers back to current and place them in appropriate income-driven repayment plans, rather than granting across-the-board loan write-offs.

How to Prepare for the Return of Student Loan Payment

“Will student loan forbearance be extended?” Is definitely the question people are asking. But at some point the pause on payments will end. To find out the size of your payment and length of your loan, contact your loan servicer. It’s possible you will have a different company to deal with than you had before the pause. Millions of borrowers, for example, are to send their federal student loan payments to new loan servicers because FedLoan Servicing, Navient, and Granite State ceased their contracts. To find out more, visit your account dashboard and scroll down to the “My Loan Servicers” section, or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Pay the Lowest Possible Interest

You may be paying high interest because of capitalization following forbearance, because the fixed interest rate on your federal loans granted years ago is sizable, or you have a private loan with high interest.Whatever the reason, it’s these interest rates that can trap people into paying down their loans for many years. According to the latest statistics, nearly 45 million Americans owe nearly $1.7 trillion in student loan debt. The average student-loan debt holder takes 20 years to pay off what’s owed. 

Pay Off Your Loans as Soon as You Can 

Some people have found that it is worthwhile to pay larger amounts on their loans to get rid of them faster.You won’t be penalized for paying your student loans early or paying more than the minimum required.  However, you should always inform your student loan servicer by email, phone, or mail to apply overpayments to your current balance.

Consider Student Loan Refinancing

Some people holding federal student loans refinance to get lower interest rates and more favorable terms. How to refinance your student loans: research private student loan sources, including banks and other financial institutions, and then apply. The holder of the new loan will pay off the federal loan and you start paying the new entity. Your credit rating and length of employment will be key to getting a low interest rate, one that you could lock in for the length of the loan. The disadvantages of refinancing student loans include the fact that you would no longer be eligible for government forbearance programs or a White House future cancellation of debt.

Consider Lantern's Student Loan Refinancing Rates  

If you are interested in refinancing your federal student loan, you will need to compare interest rates and terms to find the most advantageous deal. Compare student loan refinancing rates with Lantern to see what you could qualify for. Your financial “health” will be key to what you can obtain. As of mid-March, loans ranged from a 5 year loan with interest rate of 3.57% to a 20 year loan with interest rate of 5.1%. Once you refinance, you will no longer be able to obtain government forbearance on a student loan.
Photo credit: iStock/shih-wei
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0122053

Frequently Asked Questions

When will the federal student loan moratorium end?
Will there be another federal student loan payment forbearance extension?
How do I repay my student loans after the moratorium expires?
Can I refinance only private student loans?

About the Author

Nancy Bilyeau

Nancy Bilyeau

Nancy Bilyeau writes about student loans, mortgages, car insurance, medical debt and many other finance topics for Lantern. A veteran of the magazine business, she has edited stories on personal finance for Good Housekeeping and DuJour magazines and has written articles for The Wall Street Journal, Readers' Digest, Parade, Town & Country and Lifetime/A&E, among others. She is a graduate of the University of Michigan.
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