Student Loan Repayments for 2022: Everything You Need to Know

Over 41 million federal student loan borrowers have received much-needed financial relief.

Due to the pandemic and its impact on the economic landscape, federal student loan payments were paused in March 2020, and repayments were set to resume after January 31, 2022.

Now, we have a major update:

The pause on federal student loan repayments has been extended until May 1, 2022.

The Washington Post confirms that the omicron variant has forced the White House to rethink this crucial pocketbook issue for tens of millions of Americans. 

If you have federal student loans, this means that you have an additional three months to readjust your finances before repayment plans resume. 

Here’s what you need to know. 

How to Prepare for Student Loan Repayments to Begin Again

Once you pause a routine (such as making monthly student loan repayments), it can be difficult to resume. 

But simply picking up where you left off isn’t the only challenge.

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Thanks to the pandemic, we now face a totally different financial and economic landscape compared to March 2020, when the pause was first put into effect.

So that raises the question: how can you prepare for repayments to begin again in May 2022?

1. Make sure your federal student loan servicer is the same.

While you borrowed money from the federal government, you are not repaying the Department of Education directly. Servicing companies are the “middle man,” so to speak, and your repayments are being made directly to these loan companies.

However, it’s not uncommon for federal student loan servicers to buy out other servicers or to avoid renewing their contracts altogether.

What does this mean for borrowers?

It means that your loan servicer in 2022 might not be the same as it was in March 2020.

Since the pause was initiated, federal loans became an “out of sight, out of mind” situation. If your servicer was bought out or opted out of renewing their contract, then you will need to make your repayments to your new provider.

Visit studentaid.gov to officially determine where you should send your payments as well as the minimum payment requirements.

If your servicer has switched, you should have received snail mail notification. Given the nationwide delivery delays, the fastest and surest way is to visit the studentaid.gov website.

2. Start repayments now, if you can.

Just because federal student loan repayments are paused, it doesn’t mean that you can’t still continue making payments. Broadly speaking, the pause initiated two benefits for borrowers: (1) 0% interest rates and (2) no minimum payments required during the pause.

If you are able to afford it, any payments made during this time will enjoy a 0% interest rate. This means that 100% of any repayment you make goes towards your principal balance.

This will help you save money and pay off your federal loan even faster.

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Better yet, you’ll already be in the habit of making monthly repayments by the time the official pause ends after May 1, 2022.

3. Update your contact information.

A lot has happened since March 2020. Maybe you moved back in with your parents to save money. Perhaps you accepted a new job. Maybe you chose not to renew your lease and decided to move into a new apartment.

Whatever your situation, if your contact information has changed since March 2020, you’ll want to update it on studentaid.gov and directly with your service provider.

Incorrect information could result in missing critical correspondence.

In addition to your mailing address, don’t forget to update your phone number or email address, if appropriate. Some service providers may even ask for your income, which could lower your minimum monthly payment, if you’ve experienced a financial hit due to the pandemic.

4. Figure out what your first payment will look like.

Despite the pause, you should be able to get a billing statement from your servicer about your first payment.

This should include:

• The payment due date
• The updated or adjusted interest rate
• Your minimum payment due

If this information isn’t readily available on your loan servicer’s website, you should still be privy to these requirements. Call or email your provider so you know what to expect.

These pieces of information are critical to creating your budget.

5. Slowly begin incorporating your monthly payment into your budget.

Since March 2020, millions of borrowers have gotten used to a budget without student loan payments.

If your income was impacted as a result of the pandemic, then this was much-needed relief.

On the other hand, recurring monthly payments can be a shock to the system if you’ve become accustomed to living without them.

The easiest way to begin incorporating your monthly payment into your budget is to either begin making “extra” payments during the remainder of the pause — or to put this money into your savings account.

Either way, you’ll begin getting used to factoring these payments into your budget.

Ideally, you’d take advantage of the 0% interest rate, as you’ll be saving money! However, everyone’s personal situation is different, and you may have different priorities during this time.

6. Make sure your repayment plan is still the best for your situation.

The world is a different place today than it was in March 2020. While we still have a few extra months of the pause, take advantage of this time to evaluate whether you are enrolled in the best repayment plan for your current financial situation.

And don’t worry: just as you can change your plan now, you can change your plan in the future, if you need to.

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The three most common repayment plans are the standard repayment plan (even monthly payments over the course of approximately 10 years), graduated repayment plan (low monthly payments that accelerate – or “graduate” – over the course of 10 years), and the extended repayment plan (25 years rather than 10 years).

There are at least 5 additional repayment plans available to the majority of borrowers. Visit studentaid.gov to find the best plan that you can refer to when speaking with your loan servicer.

7. Take action now.

The most important thing you can do today is to take action now.

Yes, federal student loan repayments have been paused until May 2022, but time has a funny way of flying by. Don’t let your first payment catch you off guard.

Whether it’s getting used to factoring your payment into your budget or needing to readjust your payment plan, do not procrastinate.

Taking action today can help prevent potential headaches or financial hardships in the future. Remember, you are in control of your finances and you have the ability to make the repayment terms favorable for your current situation.

Until May 2022… 

In the meantime, the pandemic has only underscored the importance of having a healthy savings account and an emergency fund that you can rely on. 

Conventional wisdom suggests that you should have three to six months’ worth of expenses in accessible cash. 

For the best return on your savings, it’s best to keep it in a high-yield savings account. 

I encourage you to evaluate your situation and take action today. The closer we get to May 2022, the busier loan servicers will be responding to requests and handling customer service inquiries.

Trust me, your future self will be thankful for the intentional planning you do right now. 

If you need help planning your budget or dealing with student loans, these are some of my previous articles I recommend reading:

• How to Get Your Finances in Order for 2022
• Should You Consolidate Your Student Loans?
• 7 Ways to Pay Off Student Loans When You Can’t Afford the Payments
• How to Start a Budget When You Live Paycheck to Paycheck
• Why I Recommend Pen to Paper Budgeting Over Apps

These articles should give you a headstart on your budget heading into 2022!

One Final Note…

Again, I can’t stress the importance of taking an active role, rather than a passive role, in your student loan repayments. 

In addition to taking action today, I encourage you to mark May 1, 2022, on your calendar.

Why?

Because it’s critical to stay aware of your upcoming payment date and to avoid ignoring it. 

The sooner you prepare, the easier the transition will be!