(WXYZ) — It's been nearly two years since people have had to pay federal student loans due to the COVID-19 pandemic, but the forgiveness on federal student loan debt is set to expire at the end of January.
President Joe Biden's administration is likely to let the moratorium expire on Jan. 31, 2022, meaning federal student loan payments are set to resume on Feb. 1, 2022. The payments were paused in March 2020 due to the pandemic, and the moratorium has been extended a few times. Many are hoping that will happen once again.
“Starting out, I had probably over $60,000 in student loans. I’ve got it locked down to about half of that now.” Christopher Oskoian said. He has about $35,000 left in payments.
“I don’t have a huge amount of student loans. It’s probably under $10,000, but that’s still $10,000 worth of debt that is on me to pay it back," Amanda Kennedy added.
Metro Detroiters like Kennedy and Oskoian say the federal student loan relief program made a difference.
The plan was to allow those who owe debt to be more strategic with their finances at a time when many people were out of work.
"I'm trying to be smart about it, I have been paying down principle this year. At 0%, you’re not gaining interest," Oskoian added.
According to the White House, about 41 million borrowers benefited from the program.
The Student Debt Crisis Center, which aims to end the student debt crisis, is working to get the pause to continue.
Cody Hounanian, the executive director of the center, said they are "deeply concerned and working around the clock on the issue of addressing student loan repayment restarting."
Hounanian said the organization recently surveyed 33,000 people across the country with student loan debt. Nearly 9 out of 10 reported they're not financially secure enough to resume payments.
“So we don’t understand why this administration is dead set on restarting payments. On top of the financial instability, we’ve got the Omicron variant which is spreading across the country," Hounanian said. "We also have rapid inflation. There are just many reasons why we can’t drop this huge debt burden on tens of millions of families in February.”
Whether or not the Biden administration and Congress don't extend the program, the center suggests having a plan of action.
The federal student aid website has six different steps to make sure you're prepared for the student loan payments to resume:
1. Update your contact information
The feds say wrong contact information could make you miss important updates
2. Get information about your next payment
Once the pause ends, you will get a billing statement with due date, interest and payment amount. The payment will be due no sooner than 21 days after the statement.
3. Make sure you're on the best repayment plan
You can use a loan simulator to explore your repayment options
4. Take action if you want to lower your monthly payment
You can apply for a specific plan or asked to be placed on a plan with the lowest monthly payment amount
5. As a last resort, contact your servicer and ask for short-term relief
You can request to temporarily pause or lower payments through short-term relief.
6. Understand what happens if you don't repay your loan
If you miss a payment, your loan becomes delinquent. After 270 days, your delinquent loan goes into default, which means many things can happen for the government to get your money back