Student loans will change in a big way in 2022.
Here’s what you need to know – And what this means for your student loans,
2022 will be a big year for your student loans. From student loan relief to potential student loan forgiveness, expect big changes for student loans. Here are 5 big changes to watch out for in 2022:
1. Student loans will be put on hold for four months
For the first four months of 2022, federal student loan payments will be withheld. This means you will not need to make federal student loan payments until May 1, 2022. (Student loans have been put on hold, but here are 6 things to do now). With 0% interest rates, no new interest will accrue on your federal student loans. Finally, if you have student loans in default, you won’t face any collection or garnishment of wages or Social Security checks. Importantly, this only applies to federal student loans, but you must continue to pay off private student loans. That said, this is why you should pay off student loans even if you’re on hold.
2. Student Loans Can Be Canceled
Student loans may be canceled in 2022. This is the dream of progressives in Congress and student loan advocates everywhere. While there’s no guarantee, President Joe Biden could cancel more student loans on a targeted basis. (Student loan borrowers will now get $15 billion in student loan cancellation). To date, Biden has canceled $12.7 billion in student loans since becoming president. If Senate Majority Leaders Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) get their way, Biden could, while unlikely, cancel massive student loans of up to $10,000. (Here’s a list of everyone who wants Biden to extend student loan relief). It is also possible, though less likely, that Congress passes bipartisan legislation that provides additional student loan relief, which may include some student loan forgiveness. One thing is clear: Don’t expect all your student loans to be canceled. It’s also possible that student loan forgiveness may have been the reason Democrats lost the midterm elections.
3. Student Loan Payments Will Be Easier
In 2022, student loan payments will become easier. Biden and the US Department of Education are focusing on making student loan payments simpler and less bureaucratic for student loan takers. To help student loan borrowers, Biden has increased student loan relief three times and has also advised student loan borrowers to do these three things. Among other changes, Biden wants to make it easier to enroll in income-driven repayment plans such as IBR, PAYE, REPAYE and ICR. Biden wants to provide more time to re-certify discretionary income, and to allow student loan borrowers to self-report income to direct loans. As a presidential candidate, Biden also proposed changing income-driven repayment plans so that your monthly student loan payment is only 5% of discretionary income (instead of 10-20% of current income).
4. Student Loans Will Get More Expensive
Expect student loans to be more expensive in 2022. (What do higher interest rates mean for your student loans). Why? Interest rates are expected to rise this year. The Federal Reserve announced its intention to raise interest rates, and this could happen several times in 2022. This means that student loans can also carry higher interest rates. Most current federal student loans will not be affected because they have fixed interest rates that will not change. However, some older federal student loans have variable interest rates, which may change when interest rates rise. Private student loans with variable interest rates can also change when rates rise. Finally, if you plan to borrow a new federal student loan in 2022, it could have a higher interest rate if the Fed raises rates in early 2022.
5. Student loans can be refinanced at historically low rates
Student loans can now be refinanced at historically low rates. This is great news for student loan borrowers who want a lower interest rate, lower monthly payment, or both. Rates start as low as 1.74%.
This student loan refinance calculator Shows you how much money you can save.
With student loan refinancing, you can choose a fixed or variable interest rate as well as a student loan repayment term of 5 to 20 years. You can refinance private or federal student loans, or both. For example, if you think you’ll need federal benefits such as forbearance, deferment, income-driven repayment or public service loan forgiveness, you may want to refinance your federal loans and private loans only. That said, if you are more focused on saving money and paying off student loans faster, student loan refinancing can help you save thousands or even thousands of dollars, depending on your student loan balance.
Here are some popular ways to save money and pay off student loans:
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