Just the facts
- The automatic deferment of federal student loan payments with 0% interest is now set to end May 1, 2022.
- This pause on payments applies only to federal student loans, including most medical and dental school loans.
- It is unclear if this pause will be extended again past the May 1, 2022.
- Even if you do not owe money to the government for your student loans until May of 2022, you should still pay attention to potential loan servicer changes.
Biden Extends the Student Loan Payment Pause: What This Means for Your Medical and Dental School Loans
On March 27, 2020, the CARES Act was signed into law. The $2 trillion piece of legislation provided the first set of sweeping relief measures early in the COVID-19 pandemic.
One of the hallmark pillars of the CARES Act was the automatic deferral of federal student loan payments. Additionally, interest accrual was waived during this period. The benefit was originally set to expire on September 30, 2020, but President Biden has now extended the deadline for this to expire to May 1, 2022. Note that this extension continues to exclude private student loans from forbearance.
Why did President Biden extend the student loan payment pause for physicians, dentists, podiatrists, and veterinarians?
Just like most things in life: it’s complicated. There are a multitude of factors including but not limited to: the omicron variant and its effect on the economy, upcoming changes to federal student loan servicers, as well as recent unsuccessful attempts by the Biden administration to pass legislation affecting domestic policy. Likely, all of these issues played a part in putting pressure on the administration to deliver on some sort of policy change.
How are doctor’s loans affected by this change?
For those with private student loans, payments will continue to be due as private student loan companies are not affected by the federal payment pause extension. However for those with federal student loans it is important to know that through May 1, 2022 your loans will:
- Have no payments due.
- Have no interest accrual.
- Most likely continue to qualify for PSLF (although this hasn’t been clarified yet).
Will the student loan payment pause be extended past May 1, 2022?
It is anybody’s best guess as to what the public health, economic, or political landscape will look like leading up to May. However, it is worth noting that this is the shortest extension of the federal student loan pause yet by the executive branch since its initial roll out in March of 2022. This short extension may be due to already occurring changes in federal student loan servicers (see below). The administration has stated that they are attempting to separate in time the issues of payment resumption and also federal student loan servicer switching.
What should doctors and trainees be monitoring on their federal student loans?
The federal government offers student loans to eligible borrowers with competitive rates and terms. But once you take out the loan, a private company oversees the payment process. This is also called student loan servicing.
Physicians, dentists, and veterinarians with federal student loans are likely to be impacted by upcoming changes among loan servicing companies. Some of the largest servicers that currently manage federal student loan payments, including Navient and Fedloan Servicing, are not continuing their service contracts, and transferring their portfolios to other companies. For more information, read here. Loan servicer switchovers are notoriously problematic, so doctors should:
- Research if your federal student loan servicer is set to switch.
- Confirm your current servicer has your updated contact information.
- Print your statement history – including payments and PSLF progress – before the switch occurs.
- Read new loan rules and ensure your rate and term have not changed.
Federal student loans are subject to change as policies and political pressures continue to shift. If you have federal student loans, it behooves you to stay abreast of any proposed changes to your loans as it could have large effects on your pocketbook. If you have federal loans but are looking to refinance or if you have private loans and are looking to save money by refinancing, check out our our guide here.