Amid Rising Costs, Borrowers Are Worried As Student Loan Payments Will Resume Soon
As student loan payments are expected to resume in the coming months, many of the borrowers are worried about the transition. Richelle Brook is one such student who has no idea what she is going to do when the student loans resume in the fall. The single mother of two has already been struggling to make ends meet amid high inflation.
“I go grocery shopping and spend $300 or $400 for food that’ll last two weeks in my house,” said Brooks, 35, as per CNBC.
Brookes' mother recently moved in with her as she was failing to pay the rent in Los Angeles. Brooks earns close to $100,000 as a high school principal. With her loan balance at nearly $240,000, Brooks doesn't know what to do.
“With an extra $600 a month, where is that going to come from?” Brooks said.
Biden administration has extended the pandemic payment halt quite a lot of times, but the Supreme Court may announce the repayment to resume soon.
“The emergency period is over, and we’re preparing our borrowers to restart,” Education Secretary Miguel Cardona said at a Senate hearing last month.
How Much Did Borrowers Save Due To The Loan-Repayment Pause?
The pause was first announced by former President Donald Trump in March 2020. It has since been renewed eight times. Almost all borrowers were given the advantages with only 1% of the borrowers continuing to make payments on their education debt, according to an analysis by higher education expert Mark Kantrowitz. Hence an average American saved around $15000 in student loan payments.
When Exactly Will The Loan Repayment Resume?
The pause is likely to expire in 60 days after June 30, per the latest guidance in the federal debt ceiling bill. However, the exact date has not been announced yet.
How To Plan For The Repayment From Now?
Here are some key points to keep in mind.
Find The Best Suited Repayment Option For You: There are many plans for you to choose from. The most popular one is of course standard repayment which allows you to repay your loan the fastest. Other repayment options include Income-Driven Repayment (IDR) which lets you extend your length of time. The third kind is extended repayment which starts slow and then gradually increases over the course of time. You can also put in requests for economic hardships and unemployment deferment.
How To Apply For Income-Driven Repayment (IDR)?
You can apply for the IDR plan online at, https://studentaid.gov/app/ibrInstructions.action.The application process is easy and quick.
Is It a Good Idea To Speak To An Advisor?
According to Fran Gonzales, who worked as a supervisor for a financial organization, it's always a good idea to speak with a mentor or an advisor in order to educate ourselves, as per PBS.
What If You Can't Pay?
You can always apply for deferment as mentioned, but how exactly does one navigate from there? To determine if you are eligible for deferment and if it's a good idea, you need to contact your loan servicer. One thing to keep in mind: interest still applies during deferment or forbearance.
Can My Student Loan Be Forgiven After 10 Years?
If you worked for a government agency or a non-profit, the Public Service Loan Forgiveness Program offers cancellation after 10 years of regular payments and some IDR plans cancel the remainder of the borrower's debt after 20 to 25 years. However, it's important to keep in mind that only the best IDR plans actually qualify for these programs. As per PBS, these won't be affected by Supreme Court ruling.
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