In early August 2021, the Biden administration unveiled plans to extend the current student loan relief program. Prior to this announcement, the current moratorium was set to end in September. However, leaders have pushed this date back to January 31, 2022. The Resolvly team has highlighted five key takeaways of this latest extension below.
1. There Will Not Be Another Extension
According to the Biden administration, this will be the “final” extension given. However, no legally binding agreement prevents them from issuing an additional extension. Still, student loan borrowers should prepare to begin making repayments in February 2022.
2. Loan Servicers May Change By Early 2022
The current administration did not explain precisely why they decided to offer this extension. But many lawmakers have expressed concern about an upcoming change to federal student loan servicing that could impact debtors.
Currently, two of the largest federal student loan servicers are FedLoan Servicing and Granite State Management. Both of these entities are contracted with the Department of Education through the end of the year.
Unfortunately, neither servicer plans to renew their agreements. This means that millions of accounts will be transferred to new loan servicers.
3. Frozen Months Should Count Toward Loan Forgiveness Eligibility
Perhaps the best piece of news associated with this extension is that the suspended months still count towards various loan forgiveness programs. When determining eligibility for loan forgiveness, these months will be counted as though the debtor is making payments. Suspended months are also attributed to loan rehabilitation programs.
4. Federal Student Loans Are the Only Debts Covered
The biggest shortcoming of the extension is that it only applies to federal student loans. People who are burdened by private student loan debt will not receive any protection under this plan.
This includes the following types of student loan debt:
● Perkins loans
● Private student loans
● FFEL-program loans in good standing
However, FFEL loans that are in default are protected by the latest extension. If you are bogged down by private student loan debt, then you will have to seek other remedies.
Perhaps the best way to deal with private student loan debt is to seek out legal-based debt resolution. This approach is safe and effective because it involves working with an experienced debt resolution attorney. These lawyers can help to resolve your debt once and for all.
5. No Student Loan Cancellation Plans Are in Place
Since the start of the Biden administration, millions of current and former students were hopeful that their loans would be canceled altogether. Currently, there is no concrete plan in place to accomplish that goal.
The administration continues to review the legalities of an executive action to cancel loans, but it has not made any additional announcements about progress.
In the meantime, people who have federal student loan debt willhave to wait with bated breath as the remaining months of the moratorium wind down. Those who have private loans may be best served by seeking out legal counsel in order to resolve their debt.
If you want to find a talented debt-resolution attorney, ResolvlyLLC can help. We are an attorney referral service that specializes in connecting clients with top-tier legal counsel.
About Resolvly, LLC
Resolvly is a Florida Bar-approved lawyer referral service that helps clients nationwide to connect with consumer protection attorneys that specialize in debt resolution.
Founded in 2015, the Boca Raton-based company has become an industry leader by helping thousands of Americans find the right, legal-based solutions to reduce or eliminate their unsecured debt. Resolvly helps with credit card debt, private student loans, business debt, medical bills, and vehicle repossessions.