Student loan payments restart

After more than three years of COVID-related reprieves, Sunday ushered in the resumption of federal student loan epayments. (Cue the groans from the millions who are impacted…)

For those who have paid off student loans a long time ago, it may be hard to conjure up empathy, but please try to hold back on your judgment, so we can encourage tens of millions of borrowers to get back on track.

Q Where should I start?

A Although most borrowers have been preparing for this moment, there are still those who need to act right now. If you haven't heard from your loan servicer, get in touch with them immediately to confirm your personal information, loan amounts, interest rates and payment plans. Make sure that you have auto-debit enrollment to avoid missed payments and penalties.

Q What if I can't afford payments?

A Head to the Federal Student Aid website (studentaid.gov) and use the loan simulator. This easy-touse tool allows you to calculate student loan payments and choose the repayment plan that best meets your needs. The repayment options include Income-Driven Repayment plans (IDR), the newest of which is called the “SAVE” (Saving on a Valuable Education) plan.

Q What's the SAVE plan?

A SAVE is a modification of the Income-Driven Repayment (IDR) plans already available. Like its predecessors, SAVE helps borrowers with direct federal student loans that are in good standing, who are having financial difficulties.

Monthly payments for SAVE are based on the borrower's monthly income and the size of the borrower's family, a valuable feature for those who have had kids during the past few years.

SAVE also treats interest differently. If your regular payment isn't enough to cover the interest owed at that time, the unpaid interest is automatically erased. Additionally, single borrowers who earn less than $15 per hour will not have to make ANY payments. If you previously enrolled in the REPAYE IDR plan, you will be automatically enrolled in the SAVE plan.

Q Can I qualify for loan forgiveness under SAVE?

A

Yes! Under SAVE, borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. If you work for a government or not-forprofit organization, you can still enroll in the Public Service Loan Forgiveness (PSLF) program.

Q

What if my budget is tight or I miss a payment?

A

Most borrowers have been combing through their budgets to free up even