Student Loan Payments Resume in 2022. Here’s What to Do if You Can’t Pay

The federal pause on student loan collection ends in February, but there are options for the millions of borrowers who can't afford to restart payments.
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Anne Dennon
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Anne Dennon covers higher education trends, policy, and student issues for BestColleges. She has an MA in English literature and a background in research strategy and service journalism....
Updated on January 4, 2022
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  • After nearly two years, student loan payments and interest will return in February.
  • Officials say they won't extend the loan pause again, and have no firm plans to cancel student debt.
  • Borrowers who can't afford their payments still have options.

For almost two years, the government paused all payments, interest, and defaults on federal student loan debt. Enacted under the CARES Act in March 2020, the pause was extended by both former President Donald Trump and President Joe Biden. Collection is set to resume January 31, 2022.

According to the Biden administration, the fourth extension announced in August was the final one. By February, loan payments will restart, as will interest accrual and collections on defaulted loans. Recent studies show student loan borrowers are anxious about the looming payments.

A study from Bankrate and BestColleges found that 75% of borrowers surveyed expect their finances to be negatively impacted when forbearance comes to an end. Meanwhile, a November survey of almost 34,000 borrowers by the Student Debt Crisis Center found that 89% of borrowers employed full time say they are not financially secure enough to restart payments. About the same share (88%) say the federal relief was critical during the pandemic.

The debt burden feels crushing to a significant portion of borrowers, who say the loan payments take a massive bite out of their budgets, already stretched thin as inflation hits a 30-year high. According to the Student Debt Crisis Center survey, more than a fifth (21%) of respondents never expect to be ready to resume payments on their student loans.

While some politicians push for a fifth extension, others argue the entire system needs to be overhauled, including the Public Service Loan Forgiveness program and income-driven repayment plans. Both plan types are under examination by the Department of Education (ED), and, according to internal memos, so is the authority of the White House to administratively cancel student debt.

Short of total reform, the plan come February is to provide leeway to borrowers in the initial months of resuming payments. The firm details promised by the end of October have yet to appear, but Politico reports that the ED promises to aid "at-risk" groups of borrowers — new borrowers, delinquent borrowers, and borrowers who never graduated from college.

Options for Students Who Can't Afford to Pay Student Loans

The education department announced in August that the "final extension" of federal loan forbearance would expire in January 2022. This gave borrowers six months to financially prepare for payments to restart.

Several internal documents obtained by Politico under a Freedom of Information Act request outline the ED's "return to repayment" strategy. Among the measures that department officials are considering:

  • Instructing loan service providers to provide a grace period during the first few months of repayment, during which borrowers would not be penalized for late payments. Borrowers who miss a payment during the first 90 days would not be considered delinquent, but would instead be automatically granted forbearance — essentially extending the loan pause another three months.
  • Relaxing requirements around applying for and recertifying income for income-driven repayment plans, such as permitting borrowers to complete the recertification process over the phone.
  • Automatically returning the more than 7 million federal borrowers in default to good standing, a proposed plan known internally as "Operation Fresh Start."

Even without these proposed measures, student loan borrowers who aren't ready to start paying in February have options:

  • Apply for forbearance: Federal borrowers may qualify for up to 36 months of additional forbearance, or paused payments, through unemployment deferment or economic hardship deferment. Keep in mind that unlike forbearance due to the pandemic, during most other types of forbearance interest continues to accrue. Accrued interest increases the total cost of the loan and the time it will take to pay it off or have it forgiven if you're enrolled in a forgiveness program.
  • Refinance your student loan: If the monthly payment you were making prior to the pause is too much, now could be a good time to refinance your loan with rates at historic lows. Find a repayment plan that suits you by using the Loan Simulator, a tool from the Office of Federal Student Aid (FSA).
  • Enroll in income-driven repayment: If your income has changed over the course of the pandemic, consider applying for an income-driven repayment (IDR) plan. IDR plans limit monthly payments to 10-20% of your discretionary income, which could reduce payments by hundreds of dollars or even drop it to $0 per month. You can enroll on the FSA website.

While exploring how to afford your student loan payments, two words to the wise:

  • Avoid scams: The FSA warns against unexpected offers of financial aid with names like "pandemic grant" or "Biden loan forgiveness." There is no further pandemic-related relief for federal student loan borrowers at this time.
  • Avoid missing payments: If you miss just one payment, your loan becomes delinquent, leading to late fees. Loans delinquent 90 days or more get reported to the national credit bureaus, harming your credit score. Loans delinquent 270 days or more go into default, which can lead to losing access to student aid and the garnishment of tax refunds, Social Security benefits, and wages.

Contact with Your Student Loan Provider

Three federal student loan providers — Navient, the Pennsylvania Higher Education Assistance Agency (PHEAA, also known as FedLoan), and Granite State — announced that they would end or transfer their contracts with the government at the end of the year. The ED used its authority to extend its contract with PHEAA for another year. Even with this concession, some 14 million borrowers will have a different company.

This November, seven Democratic senators including Sen. Elizabeth Warren sent letters to the heads of these three student loan providers. The senators called out loan servicers for their "long history of misleading borrowers," saying that "in previous transfers, failures to transfer complete and accurate information left hundreds of thousands of borrowers with account problems that continue to plague the federal loan portfolio today."

Get ahead of any potential confusion by updating your contact information with your loan servicer by phone or email if you're unable to do so online. The ED has extended call center hours of loan servicers to deal with the anticipated influx. After January 31, a billing statement or other notice should arrive at least 21 days before payment is due.

Loan Servicer Website
Granite State
FedLoan Servicing (PHEAA)
Great Lakes Educational Loan Services, Inc.
OSLA Servicing
Default Resolution Group / Maximus Federal Services, Inc.