Global Courant
After the Supreme Court rejected the Biden administration’s plan to wipe out about $430 billion in student loan debt, many borrowers are now struggling to figure out exactly when their next payment is due, how much they owe, and whether they can afford it. will be able to afford that bill.
President Joe Biden has pledged to continue working on a proposal to cancel student loan debt. But “by law, this path may take some time,” said US Secretary of Education Miguel Cardona, who promised to update borrowers in the coming months.
For now, the Biden administration is taking action to provide borrowers with some relief by offering a more affordable income-driven installment plan.
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The new Saving on a valuable education, or SAVE subscription, will reduce the amount borrowers have to pay in monthly payments by half – to just 5% of their disposable income, instead of 10%. This new SAVE plan will replace the existing revised Pay As You Earn or REPAYE plan and “goes into effect this summer,” according to the U.S. Department of Education’s website.
The department will also give borrowers a bit of a break if they can’t make loan payments in the first year by not referring missed payments to credit reporting agencies for 12 months.
Here’s what borrowers can do now
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Still, after a three-year break, tens of millions of federal student loan borrowers will have to start paying again in the fall. Interest will begin to accrue on September 1 and payments will be made in October. To prepare, borrowers should now take these five steps:
Make sure your contact details are up to date. Visit studentaid.gov — part of the education department website — to update your contact information. You want to make sure you don’t miss any billing statements and due dates. Contact your loan manager. You want to make sure that your loan manager also has your most up-to-date contact information. Your loan manager may have changed in the past three years or you may have moved. To find out who your loan manager is, go to your account dashboard at studentaid.gov and scroll down to the “My Loan Managers” section. Apply for an income-related repayment plan. Many borrowers are already struggling financially. The Consumer Financial Protection Bureau estimates that 1 in 5 borrowers are at financial risk of being unable to resume repayments. If you’re trying to figure out how to pay those bills in October, get an income-based repayment plan, or IDR plan. You can learn more about IDR plans, including the new “SAVE” plan, here. Estimate your monthly payment and sign up for direct debit. You can compare repayment plans and get an idea of what your monthly payment will be by visiting the “Loan Simulator” tool here. This is also a good time to check if you’ve signed up for direct debit to make sure your payments are made on time. Contact your loan manager directly to sign up to have your monthly payment automatically deducted from your bank account. Even if you had direct debit before the break, you’ll need to confirm that you’re re-enrolled with your payment plan. Open a high-interest savings account. Start paying off loans to yourself now by putting money in a high-yield savings account. Here you will find financial institutions that offer the best savings rates. Putting money in a savings account earmarked for paying off student debt can be a good practice to see how you handle paying those bills when they’re due again in October. (TagsToTranslate)Personal Debt
