Strategies for Managing the Complex Maze of Student Loan Debt Repayment
Score a Degree, Tackle Student Loans:
Hey there grad, congratulations! You've made it through college, but now it's time to face the reality of finding a job and starting to pay back those student loans. Navigating the student loan system can be tricky, and as it turns out, it's in a bit of a state of flux.
Ever since the COVID-19 pandemic hit, the system has been a challenge to navigate, and recent changes, court challenges, and proposals from the government only add to the confusion for new graduates.
"Graduates are entering a time of uncertainty regarding their repayment options," says Abby Shafroth, director of the National Consumer Law Center's Student Loan Borrower Assistance Project.
The Lowdown on Loans
One repayment plan, known as SAVE, significantly reduces monthly student loan payments based on a borrower's income and household size. However, the program is currently in legal limbo due to a court challenge by Republican-led states, so it might not remain an option for everyone.
Three other income-driven repayment plans are still available but could see changes. A measure in the House of Representatives aims to reduce the various income-linked options to only one.
"Borrowers are falling into a chaotic system that's constantly evolving," says Winston Berkman-Breen, legal director at the Student Borrower Protection Center, an advocacy group.
The key takeaway is that new graduates need to keep in mind that the repayment plan they initially choose might change in the future.
What You Need to Know
When do I have to start paying my federal student loans?
Most federal student loans come with a grace period of at least six months after graduation, so you've got some time to get your life in order before you need to start paying.
What should I do to ensure repayment goes smoothly?
Before graduation, complete student loan exit counseling, which is usually done through a 30-minute online tutorial. Learn about your options, compare plans, and make sure your loan servicer, the company that manages your loan, has your correct contact information.
When should I choose a repayment plan?
It's best to choose a repayment plan as soon as possible. Some experts recommend borrowers apply for an income-driven plan as soon as they can to get their applications in the queue. However, others suggest waiting until a month or two before you're scheduled to start paying to avoid rejected "stale" applications.
In the News
- Millions of Americans suffer poor credit after missed student loan payments
- Seattle weight loss patients worry over FDA limits on off-brand drugs
- WA announces this year's cap on rent hikes
- AI powerhouse OpenAI plans move to former Microsoft offices in Bellevue
- Boeing puts another DEI effort on ice, cites 'shifting environment' in US
For More Information
For payment estimates under the various options, enter your information into the Education Department's online "loan simulator" tool. According to expert Mark Kantrowitz, borrowers should choose the plan with the highest payment they can afford. They'll pay less interest over the life of the loan and pay off the debt sooner.
- The government's SAVE repayment plan, designed to reduce student loan payments based on income and household size, is currently in a legal dispute, casting uncertainty over its availability.
- In Seattle, the buzz is about AI powerhouse OpenAI moving to former Microsoft offices in Bellevue, signifying a significant shift in the region's business landscape, particularly in the technology sector.
- Personal-finance experts recommend choosing a student loan repayment plan as soon as possible, either applying for an income-driven plan immediately to secure a spot in the queue, or waiting until close to the start date to avoid potential rejections of "stale" applications.
- The education sector is also in the news, with reports of millions of Americans suffering poor credit due to missed student loan payments, and debates over rent hikes in Washington state.
- Meanwhile, in the realm of education-and-self-development, students are advised to complete student loan exit counseling before graduation, learn about their repayment options, and ensure their loan servicer has accurate contact information to facilitate a smooth repayment process.
