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Home›Variable Rate Loans›How federal student loans will change this year

How federal student loans will change this year

By Mary M. Cox
January 17, 2022
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President Joe Biden (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)


AFP via Getty Images

Federal student loans will change this year.

Here’s what you need to know.

student loans

Because the student loan exemption will only be extended for 90 days, student loan borrowers should be aware of several changes to federal student loans this year. Here are 3 key changes to your federal student loans:

1. Federal student loans: Payment starts again on May 1, 2022

Student loan borrowers have enjoyed temporary student loan leniency since March 2020, when Congress passed the Cares Act, which gave record student loan relief to more than 40 million student loan borrowers. This student loan relief included:

  • no mandatory federal student loan payments;
  • 0% interest on federal student loans; and
  • no collection of student loans in arrears

These important student loan benefits are scheduled to end on May 1st. That means student loan borrowers should prepare to resume payments on federal student loans for the first time in more than two years. Interest on student loans is returned to its normal rate and begins to accrue interest again. For example, borrowers who default on their payments may be subject to wage garnishments or Social Security benefits. (Student loan forgiveness is different from student loan forgiveness, but student loan forgiveness could be the reason Democrats lose the midterm elections).


2. Student loans are becoming more expensive

Each year, Congress adjusts the interest rates charged on federal student loans. The Federal Reserve is expected to hike interest rates at least three times and possibly four times this year. When the Federal Reserve raises interest rates, it means student loans can become more expensive. (Which means higher interest rates on your student loans). Which student loans are affected? If you borrow new federal student loans this year, they could get more expensive if the Federal Reserve raises interest rates. If you have personal student loans and have a variable interest rate, then the interest rate on your student loan may increase. The good news is that if you now have a federal student loan, an increase in interest rates will not affect your current state student loan rate. Why? Federal student loans have fixed interest rates, so they never change over the life of your student loan, regardless of whether the Federal Reserve raises or lowers interest rates.


3. Student loan forgiveness becomes easier

More student loan forgiveness is coming. President Joe Biden Facilitates Student Loan Forgiveness. The President has already canceled $12.7 billion in student loans for borrowers. (Student borrowers will receive a $15 billion cancellation on student loans). You can expect more targeted student loan cancellations, especially for student loan borrowers who work in the government sector, have a permanent disability, or have been enticed to repay by their college or university through the borrower defense. (Here’s who doesn’t get student loan forgiveness). It’s also possible, though less likely, that federal student loans will be canceled on a large scale. (Will student debt cancellation be next?) For government loan forgiveness, student loan borrowers can enter into a limited waiver to count past student loan payments that were previously ineligible for student loan forgiveness. This is a major benefit for student loan borrowers, who can “count” student loan payments, including almost two years of student loan “payments” (even if they haven’t made any) during the Covid-19 pandemic.

The most significant change to student loans this year is the end of temporary student loan relief. Prepare now so you can access your options and choose the best student loan repayment strategy for you. Here are some popular methods to pay off student loans faster:


Student Loans: Related Reading

Here’s who doesn’t get student loan forgiveness

Next is student debt relief?

Student loan borrowers receive $15 billion student loan cancellation

How Your Student Loans Can Qualify For $1.7 Billion In Student Loan Forgiveness

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