If you have a student loan held by the federal government, you will again get a payment interruption.
The Ministry of Education has extended the freeze on interest rates and payments on student loans held by the federal government in the following ways-also known as administrative tolerance- January 31, 2022.
For those who keep score, this is the third extension of the deadline for student loan extensions.
This is what you need to know.
What is administrative tolerance for student loans?
Payment suspension and accrued interest are an extension of administrative tolerance Coronavirus Aid, Relief and Economic Security Act — Also known as the CARES Act — was passed in March 2020 to address the economic problems caused by COVID-19.
Under the guidance of emergency legislation, the Ministry of Education initially announced that all federally held student loans will be in administrative suspension until September 30, 2020. The interest rate is automatically set to 0% and all payments are suspended.
The then President Donald Trump later signed an executive order extending the administrative grace period to December 31, 2020, and the Minister of Education extended these measures to January 31, 2021.
On his first day in office, President Joe Biden signed an executive order instructing the Ministry of Education to extend the freeze period on interest rates and payments for federally held student loans to September 30, 2021.
On August 6, the Ministry of Education extended the reprieve again—this time to January 31, 2022.
What loans are covered by this legislation?
The interest waiver covers all loans owned by the U.S. Department of Education, including direct loans, subsidized and unsubsidized Stafford loans, parent and graduate students plus loans, and consolidated loans.
If you happen to have Federal Family Education Loans (FFEL) and Perkins loans held by the federal government, they will also be covered. But the vast majority of these loans are held commercially, which makes them ineligible for income.
What does this legislation mean for my student loan?
There are four things to know about how administrative tolerance will affect student loans on January 31, 2022:
- It suspends loan payments.
- It stopped the collection of default loans.
- It sets the interest rate to 0%.
- Each month that is suspended will be counted as payment for the loan relief program.
Please note that the suspension does not mean that the federal government is paying for your student loan-during this period, you will not have to pay the eight-month loan without incurring interest or late fees.
The latest extension raises the question of how long the student loan can be kept, and whether this will eventually lead to the cancellation of the student loan.This remains to be seen, but until then, here are Five ways to know If you can benefit from the probation period.
Tiffany Wendeln Connors is the full-time writer/editor of The Penny Hoarder.read Her biology and other work is here, And then find her on Twitter @TiffanyWendeln.