Skip to contentPhysical Address
304 North Cardinal St.
Dorchester Center, MA 02124
It is a stressful time to have student loans. Between the pay breaks and the courts disputing the legality of the Biden administration’s SAVE repayment plan, there are many questions about what happens next.
As a student loan expert with over 15 years of experience in the industry, I understand the confusion. I’ve seen my fair share of program changes, but I’ve never been through a more complicated and tumultuous period of tug-of-war politics than we’ve seen in the last two years.
With so many factors up in the air, as you should approach your student loan repayment strategy?
You can’t control the fate of debt repayment programs or income 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 do.
💻 Check your student loan balance
Do you know how much you owe in total on your student loans? You may have an idea (or think you do), but it’s important to check.
Many borrowers I work with are surprised to find that they owe more than they originally borrowed when it is time to start repayment. This is because most loans, except for subsidized ones, start accruing interest from the moment they are disbursed. Outstanding interest, which is not capitalized or added to your loan, is listed separately from the principal balance. To fully understand the balance of your loan, it is important to carefully review your statements.
If you know who your student loan servicer is, you can access your account online to check your balance. If you are not sure, you can find out from log into your Federal Student Aid account and visit the My Aid page.
Read more: 5 ways to pay off your student loans even faster
🗓️ Get ready now to restart payments
If you are enrolled in the Savings on a Valuable Education Plan, your the loans have been in an administrative forbearance from this summer due to the plan’s legal challenges. You have not been able to make payments, and your interest rate has been set to zero. This payment network is temporary, and I hope it ends soon.
If you haven’t already done so, assess your monthly budget to accommodate your student loan payments.
Read more: Stay with SAVE for student loan forgiveness, experts say — with 4 exceptions
💰 Compare income driven repayment plans
If you are worried that SAVE will disappear or you are trying to adjust your budget to include your monthly loan payments, it is a good idea to explore all the repayment plans available. You can use the US Department of Education Loan Simulator to estimate your payments and check eligibility for specific plans. This tool will allow you to explore the payment options available for income.
Update: The department recently restore Payment options such as Earning and Income-Contingent Reimbursementtwo IDR plans that were previously eliminated. You can now apply for them online (if you are eligible).
👩🏫 Consider the PSLF buyback program
U Public Service Loan Forgiveness Program offers debt cancellation for teachers, nurses and other public service employees who work in a qualified job for 10 years and make 120 payments on their loans. If you are enrolled in SAVE and were close to reaching your 120 total payments, the recent payment break may have delayed your forgiveness. In this case, you can take advantage of the The PSLF purchase program.
The PSLF recovery program allows you to “buy back” months where your loans were on hold during a forbearance period – but only if doing so brings you to 120 total payments.
For example, let’s say you’ve already made 115 qualifying payments before your loan enters SAVE Plan forbearance. You can apply for the PSLF purchase program to buy five months where your loans were in forbearance to reach the payment requirement of 120. You can apply for the program online, and once approved, you have 90 days to pay what you owe for the number of months you buy. So, if your monthly payment was $100, you need to pay $500 to receive the forgiveness.
You also need to make sure you meet all the other PSLF eligibility criteria, such as working for a qualified employer and having the correct type of loan. If you think you are eligible and want to confirm your payment account, you can find qualifying payment amounts in your account. StudentAid.gov account.
Read more: More student loan forgiveness is on the way for PSLF loans. What’s Next for Debt Relief?
🎓 If you are in school, start paying interest
If you are still in college, your student loans have not yet entered repayment. While 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 still 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 entered repayment, you will not be eligible to enroll in a repayment plan. The refund 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.
❌ Don’t think of forgiveness as an option
Many borrowers have turned to income-driven repayment plans to reduce their monthly payments and potentially qualify for student loan forgiveness. However, forgiveness is not guaranteed, especially as legal challenges continue to threaten the SAVE repayment plan. Programs like PSLF and forgiveness under the Income-Based Repayment Plan carry less risk, since they would need congressional action to be altered or eliminated.
That said, it’s always wise to plan for full repayment of your student loans, regardless of any current potential forgiveness opportunities.
