I’m a Student Loan Expert. Here Are 5 Steps You Should Take Now — and 1 Thing Not to Do
this is already a A stressful time to get a student loan. Between the payment pause and court challenges to the legality of the Biden administration’s SAVE repayment plan, there’s a lot of uncertainty about what will happen next.
As a student loan expert with more than 15 years of industry experience, I understand the uncertainty. I have witnessed my fair share of program changes, but I have never experienced a more complex and tumultuous period than the policy tug-of-war we have seen over the past two years.
With so many factors hanging in the balance, what should you do? Develop your student loan repayment strategy?
You can’t control the fate of a debt relief program or an income-driven repayment plan, 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 when payments begin, they owe more than they originally borrowed. This is because most loans, with the exception of subsidized loans, begin accruing interest from the date they are issued. Outstanding interest that is not capitalized or added to the loan is listed separately from the principal balance. To fully understand your loan balance, be sure to review your statements carefully.
If you know who your student loan servicer is, you can log into your online account to check your balance. If you’re not sure, here’s how you can find out Log in to your federal student aid account and visit the My Assistance page.
Read more: 5 ways to pay off your student loans faster
🗓️Get ready to start paying again
If you join the Valuable Education Savings Plan, your The loan is in administrative hold Since this summer, the plan has faced legal challenges. You can’t make your payments and your interest rate has been set to zero. This payment pause is temporary and I expect it to end soon.
If you haven’t done so already, reevaluate your monthly budget to accommodate your student loan payments.
Read more: Experts say you can get student loan forgiveness by keeping SAVE — but there are 4 exceptions
💰Compare all income-driven repayment options
If you’re worried about SAVE disappearing or want to adjust your budget to include your monthly loan payments, it’s a good idea to explore all available repayment plans. You can use U.S. Department of Education Loan Simulator Estimate your payments and check eligibility for specific programs. This tool will let you explore the revenue-driven payment options available to you.
renew: The department has recently Pay-as-you-earn and income-determined repayment options reinstatedtwo IDR plans that had previously been phased out. You can apply online now (if you qualify).
👩🏫 View PSLF Buyback Program
this Public Service Loan Forgiveness Program Provides debt relief to teachers, nurses and other public service employees who have worked in qualifying employment for 10 years and made 120 loan payments. If you are enrolled in SAVE and are about to reach your 120 payment total, a recent payment hold may delay your forgiveness. In this case, you might benefit from PSLF buyback program.
The PSLF Buyback Program lets you “buy back” the months your loan was put on hold during the grace period, but only if doing so would bring your total payments to 120.
For example, let’s say you made 115 qualifying payments before your loan went into SAVE deferment. You can apply for the PSLF Buyback Program and buy back the five-month extension of your loan to meet the 120 repayment requirement. You’ll apply for the program online, and once approved, you’ll have 90 days to pay off the balance for the number of months you bought back. So, if your monthly payment is $100, you’ll need to pay $500 to get the forgiveness credit.
You’ll also want to make sure you meet all other PSLF eligibility criteria, such as working for a qualified employer and having the right type of loan. If you think you qualify and want to confirm your payment count, you can do so in your StudentAid.gov Account.
Read more: PSLF borrowers will receive more student loan forgiveness. What’s next for debt relief?
🎓 Pay interest while still in school
If you’re still in college, your student loans may not be in the repayment phase yet. While it’s difficult to predict what repayment options will be available in the future, you can take proactive steps now.
One suggestion is to pay off any interest that accrues while you are in school. Even a small donation can help lower the overall cost of the loan in the long run.
If your federal student loans are not yet in repayment, you are not yet eligible for a repayment plan. Repayment starts Six months after graduation Or if your enrollment is less than half-full, unless you enroll in another program, such as graduate school, before the grace period ends.
❌ Don’t expect forgiveness
Many borrowers have switched to income-driven repayment plans to reduce their monthly payments and may qualify for a loan student loan relief. Forgiveness is not guaranteed, however, especially since legal challenges continue to threaten the SAVE repayment plan. Programs like PSLF and forgiveness under income-based repayment plans are less risky because they require action by Congress to change or eliminate.
That said, it’s always wise to plan to pay off your student loans in full, regardless of any potential current relief opportunities.
