Millions of borrowers are required to make their monthly student loan payment for the first time in three-plus years in October, but there are several repayment plans available that could make the transition easier.
Borrowers will be on the same payment plan they were before the pandemic pause started in March 2020, but they may want to consider switching to a different plan if their financial situation has changed.
Plus, there’s also a new repayment plan, known as SAVE (Saving on a Valuable Education), that launched this summer and could potentially lower monthly payments for millions of borrowers.
Borrowers can use Federal Student Aid’s online “Loan Simulator” to compare their estimated payments under different repayment plans. They can switch plans at any time, for free, by contacting their student loan servicer or by submitting an application to Federal Student Aid.
Here are some things to consider when exploring your payment options:
Standard 10-year plan: When entering repayment for the first time, borrowers are automatically enrolled in the Standard Repayment Plan. These payments are based on how much debt a borrower has and sets a fixed monthly amount to ensure it’s all paid off, with interest, in 10 years.
Income-driven plans: If a borrower is struggling to afford monthly payments, an income-driven plan – of which there are four types, including the new SAVE plan – may be a good option. These plans calculate monthly payments based on a borrower’s income and family size and are meant to keep payments affordable for low-income borrowers. Monthly bills could be as low as $0.
Other non-income-related plans: The extended and graduated repayment plans could also lower a borrower’s monthly payment without calculating the amount based on income. They could be a good option for people who will eventually earn…
Read the full article here
Leave a Reply