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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 December 2, 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.
It’s a burning question for anyone who’s paying down their student loans and on Nov. 22, that question was answered. President Joe Biden announced another extension of the pause on student loan repayment, interest, and collections. Payments may not resume until as late as 60 days after June 30, 2023.The Biden administration says it is extending the pause on federal student loan repayments to allow for the Supreme Court to rule on whether the administration has the authority to forgive student debt.Learning the latest on the student loan forbearance extension and fully understanding these developments can 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.  Some people may assume that this term mainly describes the pause in making loan payments approved by President Biden. But the concept of student loan forbearance predates Covid-19.While in college, students are urged to fill out their FAFSA form, and many make use of need-based financial aid to pay for their education. After graduation,  Certain types of forbearance programs exist for people after they’ve graduated and are struggling with paying down their loans. Life happens, and sometimes people need help.

Types of Student Loan Forbearance

Student loan forgiveness has been obtainable for years. If you think you qualify for any of the forbearance programs because of your income or your career choice, go to the Department of Education website to learn more and obtain forms.The way it works with some of these forbearances is you won't have to make a loan payment, or you can temporarily make a smaller payment. However, the loan won’t go away unless it’s paid off or canceled, cautions the Department of Education.An important new change made in October 2022 concerned interest capitalization.“Finally, the rules help borrowers avoid spiraling student loan balances by eliminating all instances of interest capitalization not required by statute, which occur when unpaid interest is added to a borrower’s principal balance, increasing the total amount that borrowers may have to pay,” said U.S. Secretary of Education Miguel Cardona in a statement about new federal loan regulations.The interest capitalization rules will go into effect July 1, 2023, which is the effective date specified in the Higher Education Act for regulations issued on or prior to Nov. 1 of a given year.

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 eligible for AmeriCorps forbearance if 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 may qualify for a medical or dental internship or residency forbearance if you’re serving in a medical or dental internship or residency program, and you meet specific requirements.

National Guard Duty

If you are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment, you may be able to apply for the national guard duty forbearance.

Teacher Loan Forgiveness

If you perform a teaching service and meet certain requirements, you may qualify for teacher loan forgiveness.

Student Loan Debt Burden

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.Recommended: How Much Student Loan Debt is Too Much?

Will Student Loan Forbearance Be Extended?

The nationwide student loan forbearance — also known as the payment pause — granted to people making payments on their federal loans 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.The payment pause has since been extended nine times, most recently in November, when it was extended into 2023 (the Biden administration said that its end depends on when the Supreme Court rules on the constitutionality of the one-time forgiveness plan.)

Will President Biden Cancel Student Debt?

On the same day that President Biden said that the moratorium on federal student loan payments would end, he announced a one-time cancellation of up to $20,000 in federal student loan debt. Each American who earns less than $125,000 per year (less than $250,000 for married couples) will be eligible for $10,000 in federal student loan cancellation.He also announced that Pell Grant recipients can receive up to $20,000 in debt cancellation. Federal Pell Grants usually are awarded to undergraduate students who display exceptional financial need.On Oct. 17, an online form was made available on the Federal Student Aid website that allows people with federal student loan debt who meet the qualifications to apply for debt canceling.President Biden’s proposal to cancel loan debt for eligible borrowers has been met with legal challenges. As of December 2022, the processing of received applications had been frozen because of a court injunction and the acceptance of new applications halted because of another court order. On Dec. 1, the Supreme Court agreed to fast-track Biden's appeal and begin to hear arguments in February 2023. It has been reported that a decision could come as soon as June.

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 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 cancellation of debt on the amount of the loan that’s being refinanced.

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 loan rates with Lantern to see what you could qualify for. Your financial “health” will be key to what you can obtain. Once you refinance, you will no longer be able to obtain government forbearance on that part of your student loan.

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?
Photo credit: iStock/shih-wei
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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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