Student Loan Repayment Changes Set to Affect Students, Graduates Alike
Federal plans being cancelled means that some will see their monthly payments double - at minimum.
FARGO, N.D. (KVRR) – Both current college students and graduates alike are scrambling to figure out to do regarding their student loans, with major changes coming to the federal loan repayment system.
Various repayment plans are being terminated – like the SAVE plan, which will end in July.
The SAVE plan was an income-based repayment plan which capped payments at 5% of the borrower’s income.
After it finishes, the next best option will be one that caps at 10% of the borrower’s income.
And that’s if that borrower is proactive in switching their plan.
If they do nothing, the government will place them in the standard repayment plan, which is the most expensive in terms of monthly payments.
Loan experts say that you should definitely be charting a course forward, because there’s no indication the system will change in borrowers’ favor anytime soon.
“There was a lot of discussion about loan forgiveness during the Biden administration,” said Jennifer Finetti of ScholarshipOwl. “Unfortunately, I don’t see that happening given the current political climate.”
“The worst thing you can do is bury your head in the sand and hope it will go away,” she added.
The changes will also have an impact on current and prospective students.
After July 1, the only repayment option for new loans will be the Repayment Assistance Plan.
That program will require 30 years in repayment before borrowers can qualify for student loan forgiveness, as opposed to the 20 or 25 that are standard right now.
