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1. Contact your service provider
During the Covid-19 pandemicseveral of the largest companies that service federal student loans have announced they will no longer do so, meaning many borrowers will have to adjust to a new servicer once payments resume.
Three companies that serviced federal student loans — Naviant, Pennsylvania Higher Education Assistance Agency (also known as FedLoan) a Granite state – all said they would end their relationship with the government.
As a result, about 16 million borrowers will have another company to deal with when payments resume or not long after, according to Kantrowitz.
Double check that your service technician has your up-to-date contact information to receive all notifications about the upcoming change, experts say.
Affected borrowers should receive more notice, Buchanan said.
If you accidentally send a payment to your old administrator, the old administrator should forward the money to your new one, he added.
2. Find an available repayment option
The Covid-19 pandemic has changed the lives of many people. If your situation looks different than it did three years ago, it may make sense to review the payment plans available to you and find the one that best fits your current situation.
In the meantime, the law has also changed.
Student loan forgiveness is now tax-free until at least 2025 because of a provision included in the $1.9 trillion federal coronavirus stimulus package President Joe Biden signed in March 2021. This policy is likely to become permanent.
It may cause income-based repayment plans more attractive because they often come with lower monthly bills and borrowers are no longer likely to be hit with a massive tax bill at the end of 20 or 25 years of their payments.
Meanwhile, the Biden administration is also working to roll out a new income-based repayment plan this would cut some borrowers’ payments in half.
But if you can afford it, the standard repayment plan is just 10 years.
To work out how much your monthly bill would cost under different plans, use one of the calculators at studentaid.gov or Freestudentloanadvice.orgsaid Betsy Mayotte, president Institute of Student Loan Counselorsa non-profit organization.
If you decide to change your repayment plan, Mayotte recommends submitting this request to your administrator before turning your payments back on.
“I have significant concerns that there will be major service delays,” she said.
3. Have a plan if you can’t make payments
If you are unemployed or experiencing other financial hardship, you will have options when payments resume.
First, submit a request for economic hardship or unemployment defermentsay the experts.
These are ideal ways to defer payments on federal student loans because they typically don’t accrue interest when it comes to subsidized college student loans.
However, if you don’t qualify for either, you can use a patience continue to suspend your accounts. But keep in mind that the interest will accrue and your balance will be larger – sometimes much larger – when you continue to pay.
