Confused About Your Student Loans? You’re Not Alone
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If you have federal student loans, you’ve endured a lot of uncertainty over the past five years.
It started with the pandemic payment pause — and all the guessing about when monthly bills would resume. Then starkly different policy agendas made things even more unpredictable, moving proposals for loan forgiveness and payment plans in and out of contention.
Now it’s not clear how the $1.6 trillion federal student loan portfolio will be managed should the Trump administration convince Congress to close the Department of Education.
And there have been legal challenges all along the way. These make it hard for borrowers to know which policies will stick, let alone to understand and navigate their options.
Right now payment plans are the big question mark. Borrowers are venting about the latest developments on social media, and the frustration is palpable.
Many complain about confusing communications and changing timelines. Others are worried about losing forgiveness options. Some have reported sudden increases in their monthly payment amounts that they don’t understand.
The uncertainty may be discouraging, but don’t let it derail you: If you don’t understand your bill or can’t afford your payments, ask your loan servicer for help.
If you fall behind, you risk damaging your credit score and losing any future eligibility for loans, aid or forbearance. Plus, the government can offset your tax refund or garnish your wages or Social Security.
If you enrolled in SAVE — a payment plan that’s been blocked by a federal appeals court — take advantage of the interest-free forbearance period to build up savings, recommends Mark Kantrowitz, a nationally recognized student loan expert.
Payment amounts would almost certainly be higher under another income-based plan, so extra cash could be especially useful when monthly bills resume, he said.
One caveat here: Since the latest SAVE court ruling was announced, application processing and income certifications for SAVE as well as other income-based payment plans have been delayed so that loan servicers can update their systems.
These delays may be one reason some borrowers have reported abrupt increases in their monthly payment amounts. But “loan servicers are actively working to move those affected borrowers back to the monthly payment amount based on their income and family size,” according to the Federal Student Aid website.
So what? The situation with federal student loans can be overwhelming. Protect yourself by staying informed, engaged, and proactive. (Here’s a list of student loan organizations that can help with information and advice.)
Keep a paper trail and check your account regularly. And if you’re struggling to make your payments or can’t make sense of your bill, reach out to your loan servicer to discuss your options.
Related Reading
• Proposed Department of Education Shutdown: Student Loan Implications (SoFi)
• Key Student Loan Repayment Applications Reopen, but Processing Is Paused (Nerdwallet)
• Here are Some Student Loan Repayment Tips Amid Challenging Times for Borrowers (CNBC)
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