I am a Student Loan Expert. Borrowers Should Do These 6 Things Before Moving Into The White House

It has not been an easy few years for student loans. Amid multiple payment freezes and the courts disputing the legality of the Biden administration’s Save a Precious Education plan, the fate of student loan forgiveness and other programs remains unclear.

Elaine Rubin, a higher education policy expert

As a student loan expert with more than 15 years of experience in the industry, I understand the confusion. I’ve witnessed my fair share of program changes, but I’ve never been through an episode more complex and chaotic than the policy tug-of-war we’ve seen over the past two years.

For many reasons in the air, how can you Approach your student loan repayment strategy?

You can’t control the fate of debt relief programs or income-driven repayment plans, but there are steps you can take to regain control of your student loans. Here are five things you can do right now — and one thing you shouldn’t.

💻 Review your student loan balance

Do you know how much you owe in total on your student loans? You may have an idea (or you think so), but it’s important to check.

Many borrowers I’ve worked with are surprised to find they owe more than they originally borrowed when it’s time to start making payments. This is because most loans, except for subsidized ones, start accruing interest from the moment they are disbursed. Outstanding interest, which is not capitalized or added to your loan, is listed separately from the principal balance. To fully understand your loan balance, it’s important to review your statements carefully.

If you know who your student loan servicer is, you can log into your online account to check your balance. If you are not sure, you can find out by log into your Federal Student Aid account and visiting the My Aid page.

🗓️ Plan to restart payment

If you are enrolled in the Savings on a Valuable Education Plan, your The loans are in an administrative forbearance since this summer due to legal challenges to the plan. You have not made any payments, and your interest rate is set to zero. This payment freeze is temporary, and I hope it ends soon.

If you haven’t already, reassess your monthly budget to accommodate your student loan payments.

💰Compare income-driven payment plans

If you’re worried about running out of SAVE or looking to adjust your budget to include your monthly mortgage payments, it’s a good idea to check out all available payment plans. You can use the US Department of Education Loan Simulator to estimate your rates and check eligibility for certain plans. This tool will allow you to explore available income-driven payment options.

Update: The department is new the Pay As You Go and Income-Contingent Repayment options are restoredtwo IDR plans that were phased out earlier. You can now apply for them online (if you qualify).

👩‍🏫 Don’t sleep on the PSLF buyback program

the Public Service Loan Forgiveness program offers loan cancellation for teachers, nurses and other public service employees who work in a qualified job for 10 years and make 120 payments on their loans. If you are enrolled in SAVE and are close to reaching your 120th payment total, a recent stoppage in payment may have delayed your remission. In this case, you can benefit from PSLF buyback program.

The PSLF buyback program allows you to “buy back” the months in which your loans are restricted during the forbearance period — but only if doing so brings you up to 120 total payments.

For example, let’s say you made 115 qualifying payments before your loan entered SAVE Plan forbearance. You can apply for the PSLF buyback program to buy back five of the months in which your loans suffer to reach the 120 payment requirement. You apply for the program online, and once approved, you have 90 days to pay off your loan for the number of months you purchased. So, if your monthly payment is $100, you must pay $500 to receive forgiveness.

You also need to make sure you meet all other PSLF eligibility criteria, such as working for a qualified employer and having the right type of loan. If you think you’re eligible and want to confirm your payment count, you can find the eligible payment amounts in your StudentAid.gov account.

🎓 When you’re in school, start paying interest

If you’re in college, your student loans probably haven’t come into repayment yet. While it’s hard to predict what payment options will be available in the future, there are proactive steps you can take now.

One recommendation is to pay off any interest that accrues while you are still in school. Even small contributions can help reduce the overall cost of your loans in the long run.

If your federal student loans haven’t entered payment yet, you’re not yet eligible to enroll in a repayment plan. Payment begins six months after graduation or if your enrollment drops below half-time, unless you enroll in another program, such as graduate school, before the end of the grace period.

❌ Don’t rely on forgiveness

Many borrowers turn to income-driven repayment plans to lower their monthly payments and qualify for student loan forgiveness. However, forgiveness is not guaranteed, especially if legal challenges continue to threaten SAVE’s repayment plan. Programs like PSLF and forgiveness under the Income-Based Repayment Plan are at low risk, because they require congressional action to change or eliminate them.

That said, it’s always smart to plan for paying off your student loans in full, regardless of current potential forgiveness opportunities.

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