On November 22nd, 2022, President Biden announced via Twitter that his administration is extending the pause in federal student loan payments until August 31st, 2023. Read on for the latest information regarding this update along with 7 ways Docupop can help you prepare for when the pause in payments officially comes to an end.
1.) Checking with your current loan servicer
The Department of Education announced late last year that borrowers with loans held by Fedloan Servicing, Granite State Management and Resources, and Navient are in for a major change as the three major servicers will discontinue servicing loans once their contracts end. Federal loans serviced by Navient will be moving to Aidvantage and Granite State will shift to EdFinancial, while Fedloan-serviced loans may move to one of several contracted servicers. If you’re a Docupop member, please look for future correspondence regarding the transfer, or give our Member Success Team a call at (866) 884-5021 to discuss.
2.) Understanding your current loan term
After over two years of a pause in payments, you may need some reminding on what your payment amount is, who to pay it to, or even how to make the payment. Docupop members should keep an eye out for key communications from us regarding your loan terms or call Member Success to get confirmation.
3.) Taking stock of your financial situation
Has your income changed as a result of the COVID-19 pandemic? Nearly 40% of borrowers responded to a poll released in February by the Student Borrower Protection Center and Data For Progress said they were, “not confident at all,” that they would be able to afford their monthly student loan payments in May.
Whether you’re paying on a Fixed Repayment plan or have taken advantage of one of the Income-Driven options available, you may be eligible to recalculate your federal student loan payment as a result. Before this pause is lifted, let the Docupop team perform a financial review to make sure you’re in the best repayment plan for you.
4.) Confirming auto-debit arrangements
Prior to the pandemic, you may have had your student loan payments automatically deducted from your personal bank account. This auto-pay arrangement can help you avoid missed payments, and may qualify you for a 0.25% reduction in your interest rate. While some servicers are set up to resume automatic payments as usual, others may require you to opt back into the service. Borrowers should be on the lookout for a notice from your servicer regarding direct debit arrangements and make sure to monitor your bank account during the month of August to ensure you don’t miss a payment.
5.) Getting out of default
In addition to the latest payment pause extension, The Department of Education also released a statement on April, 6th stating that they plan to give borrowers in default a, “fresh start,” once payments resume. This major change is expected to lift impacted borrowers out of delinquency by putting their loans back in good standing. If Docupop is helping you navigate a defaulted status, our team will reach out soon with further information regarding this update along with personalized options for re-entering into the best active loan status for you.
6.) Keeping track of cancellation talks
One of the hot items left out of Biden’s April update was any new talk surrounding student loan cancellation. As borrowers wait on pins on needles, the political arena has gone back and forth on the possibility of various levels of student loan cancellation. At this time, no official legislation on this topic has been passed. If and when updates occur, Docupop will be standing by to keep you up to speed and help you properly prepare if necessary.
7.) Updating your contact information
Student loans are going through a tumultuous time, and the need to stay informed about these important changes is now more important than ever. If you’re a Docupop member and have or plan to move, change phone numbers, or get a new email address from now until August, make sure to update Member Success with the new information as soon as possible to avoid a delay in communication.
Is the August 31st pause lift set in stone?
In this ever-changing environment, anything can happen. But for now, this is the most up-to-date payment information available. If you are a Docupop member, you can enjoy peace of mind in knowing that our team will keep you informed if new changes are made or if further action is needed from your end.
How Docupop has your preparation back
A recent Government Accountability Office (GAO) report warned that borrowers might experience obstacles, citing lapses in communication from the Department of Education, servicers leaving the student loan portfolio, and remaining loan servicers meeting capacity for student loan assistance. Many borrowers are already reporting long hold times and several servicers have admitted to newly-hired staff being underprepared to answer questions. But if you’re a Docupop member, you won’t have to worry about these processing hassles because our team is doing the heavy preparation lifting for you. If you have questions about this update, how it may impact your unique loan status, or if you’re interested in learning more about Docupop’s services, please call Member Sucess at (866) 884-5021.
General Disclaimer: Docupop is not affiliated or endorsed by the DOE. This site is for informational purposes only, is general in nature, and is not intended to and should not be relied upon to provide financial, legal, or tax advice. If you have further questions regarding your federal student debt pr student loan consolidation, you can reach out directly to DOE – or Docupop.
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Blog Resources: [https://twitter.com/POTUS] [https://protectborrowers.org/new-poll-as-inflation-soars-large-bipartisan-majority-supports-president-bidens-pause-on-student-loan-payments/][https://files.gao.gov/reports/GAO-22-105291/index.html#appendix8][https://www.ed.gov/news/press-releases/biden-harris-administration-extends-student-loan-pause-through-august-31}