It was a Hard time to get student loans. Between pausing payments and courts disputing the legality of the Biden administration’s SAVE payment plan, there’s a lot of uncertainty about what will happen next.
As a student loan expert with over 15 years of experience in the industry, I understand the uncertainty. I have witnessed my fair share of changes in the program, but I have never faced a more complex and turbulent period of political tug-of-war than we have witnessed over the past two years.
With so many factors up in the air, how should you Approach your student loan repayment strategy?
You can’t control the fate of debt relief programs or income-driven repayment plans, but there are steps you can take to regain control of your student loans. Here are five things you can do right now, and one thing you shouldn’t.
💻 Review your student loan balance
Do you know the total amount you owe on your student loans? You may have an idea (or think you have an idea), but it’s important to verify it.
Many borrowers I’ve worked with are surprised to find that they owe more than they initially borrowed when it comes time to start repaying them. This is because most loans, with the exception of subsidized loans, start accruing interest from the moment they are disbursed. The interest accrued, which is not capitalized or added to your loan, is listed separately from the principal balance. To fully understand your loan balance, it’s important to review your statements carefully.
If you know who your student loan provider is, you can log into your account online to check your balance. If you are not sure, you can find out by Log in to your federal student aid account And visit my help page.
Read more: 5 Ways to Pay Off Your Student Loans Faster
🗓️ Get ready to restart payments
If you are enrolled in a savings plan on a valuable education plan, your account The loans were in administrative forbearance Since this summer due to legal challenges to the plan. You couldn’t make the payments, and your interest rate was set to zero. This payment suspension is temporary, and I expect it to end soon.
If you haven’t already, reevaluate your monthly budget to accommodate your student loan payments.
Read more: Stick with saving for student loan forgiveness, experts say — with 4 exceptions
💰Compare all income-based repayment options
If you’re concerned about your savings program disappearing or you’re looking to adjust your budget to include monthly loan payments, it’s a good idea to explore all available repayment plans. You can use US Department of Education Loan Simulation To estimate your payments and check eligibility for specific plans. This tool will allow you to explore available income-based payment options.
to update: Section recently Restore pay-by-earnings and pay-by-income optionstwo IDR plans were previously phased out. You can now apply for it online (if you are eligible).
👩🏫 Look into the PSLF Buyback Program
the Public Service Loan Forgiveness Program The debt cancellation program offers teachers, nurses and other public service employees who work in an eligible job for 10 years and make 120 payments on their loans. If you are enrolled in SAVE and are about to reach 120 total payments, a recent payment pause may have delayed your forgiveness. In this case, you may benefit from PSLF Buyback Program.
The PSLF buyback program lets you “buy back” the months your loans remain outstanding during the forbearance period — but only if it brings you to 120 total payments.
For example, let’s say you’ve already made 115 qualifying payments before your loan enters savings plan forbearance. You can apply for the PSLF repo program to repo five of the months that your loans were in forbearance to reach the 120-payment requirement. You’ll apply for the program online, and once approved, you’ll have 90 days to pay back what you owe for the number of months you repurchased. So, if your monthly payment is $100, you’ll need to pay $500 to get forgiveness.
You’ll also need to make sure you meet all other PSLF eligibility criteria, such as working for an eligible employer and having the right type of loan. If you think you’re eligible and want to confirm your number of payments, you can find the eligible payment amounts in your account StudentAid.gov account.
Read more: More student loan forgiveness is on the way for PSLF borrowers. What’s next for debt relief?
🎓 Pay the interest while you are still in school
If you’re still in college, your student loans probably haven’t entered the repayment stage yet. Although it is difficult to predict what repayment options will be available in the future, there are proactive steps you can take now.
One recommendation is to pay off any interest that accrues while you are in school. Even small contributions can help reduce the overall cost of your loans in the long run.
If your federal student loan has not yet been repaid, you are not eligible to enroll in a repayment plan yet. Payment begins Six months after graduation Or if your enrollment drops below half-time, unless you enroll in another program, such as graduate school, before the end of the grace period.
❌Do not rely on seeking forgiveness
Many borrowers have turned to income-driven repayment plans to reduce their monthly payments and potentially qualify for them Student loan forgiveness. However, amnesty is not guaranteed, especially as legal challenges continue to threaten SAVE’s repayment plan. Programs like PSLF and income-based repayment plan forgiveness carry less risk, because they require action by Congress to change or eliminate them.
However, it is always wise to plan for full repayment of your student loans, regardless of any current potential opportunities for forgiveness.
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