Student Loan Payment Pause & Deferment Extended thru June 2023

Student Loan forbearance and payment pause extended to July 2023; there are still options

November 2022 update: The student loan payment pause has been extended again, for the sixth time, to June 30, 2023.  The pause may end and payments resume if lawsuits are resolved first. If the June 30 2023 student loan pause lapses without litigation being resolved, payments will resume 60 days after that. Also big news in Nov 2022: the Biden Justice Department (DOJ) has announced new guidance which will make it easier to discharge student loan debt in bankruptcy.

April 2022 update: The student loan payment pause was set to end May 1, 2022, but the Biden administration extended it through August 31, 2022.  It was previously set to end on May 1, 2022. Since March 2020, millions of student loans were given forbearance and deferment with no payments due, interest stopped accruing, and there have been no collections against those in default due to the student loan payment pause.

Now, all that student loan relief changes back to normal on Sept 1, 2022.

Will student loans be deferred again in 2022?

As we get closer to election season, it looks like there may be more student loan deferments.  Back in August 2021, the Department of Education called the student loan pause a “final extension.” In December 2021, the White House confirmed that the student loan payment pause will not be extended. Then earlier this year and again, today, that’s exactly what the Biden administration did.

What action items should I do?

Update your contact information with your student loan servicer. While you’re there, let them know that you want to resume automatic payments if that’s your goal.

Alternatives to paying unaffordable student loans

Apply for student loan forbearance

If you can’t afford to pay your student loans, you can still apply for student loan deferment or forbearance. While it’s been automatic the past two years, student loan forbearance or deferment is still an option in 2022.

Income-driven student loan repayment plans

Also, there are income-driven repayment plans such as IBR, ICR, PAYE, or REPAYE. These programs set your student loan payment based on what you can afford, which state you reside in, and family size. These income-based repayment plans are not guaranteed acceptance, and not every loan type is eligible for each program.

Will bankruptcy help with my student loans?

You probably heard that, as a rule, you cannot discharge student loan debt in bankruptcy.  However, there are three things to consider with student loans and bankruptcy.

First, in extremely rare situations, you can discharge student loan debt in bankruptcy. You may have heard that the standard is undue hardship, and that’s exactly what you’ve got. However, courts have ruled that everyone filing bankruptcy has a hardship, and to show it’s undue is difficult, challenging, and very unlikely in most cases.

Second, filing Chapter 13 bankruptcy gets you a five-year deferment on repaying your student loans directly. You don’t generally need to apply or ask for the forbearance; it’s automatic. The student loan debt shares in the debt consolidation plan payments.

Third, there’s a Fresh Start bill in Congress which may change student loan forgiveness and allow some student loans to be discharged in bankruptcy. As 2022 begins, this S2598 bill is still in the Senate and hasn’t moved since August.

Contact us for a consultation

If you’re in the Los Angeles County area, contact us and let’s arrange for a no-obligation Zoom consultation to see if bankruptcy would help your student loan situation.