Changes in Student Loan Repayments

Three years ago, the Covid-19 pandemic changed our world. Over time, things slowly began to return to normal, and in October of this year, one of the longest lasting changes will come to an end when student loan payments are due to resume. When payments start again, they won’t look quite the same as they did when we last saw them. Millions of borrowers will have a different servicer when they resume. The reason for this is because several lenders, such as Navient, FedLoan, and Granite State, stopped managing debt for the government. Borrowers impacted by the change should receive correspondence about what steps need to be taken. If the prospect of making loan payments causes stress, there are some options available. The Biden administration has introduced a new repayment plan which could cut borrowers’ bills in half. The Saving on a Valuable Education, or SAVE plan will help an estimated 20 million people. It will be summer 2024 before all the changes go into effect, including, eventually, instead of paying 10% of the discretionary income, some borrows will only have to pay 5%. Another benefit for many borrowers is that the SAVE plan increases the income exempted from the payment calculation to 225% of the poverty line from the previous 150%. This means that single borrowers earning less than $32,800 or a family of four making under $67,5000 will not have to make payments if enrolled. The Biden administration has also taken steps to improve various loan forgiveness programs offered by the federal government. On income-driven repayment plans, the Education Department will make sure any previous and ongoing payments made by borrowers are properly calculated so that they will get the debt forgiveness they’re promised, typically after 20 or 25 years. They will also now get credit for months that were previously deemed ineligible, such as when payments were late. The Biden administration has also said they are pursuing another path to broad student loan forgiveness (after the Supreme Court blocked the previous attempt last June). Borrowers will be protected from the most severe consequences of missed payments for a full year once the payments resume. For example, loans will not go into default and delinquent accounts won’t be reported to credit agencies. Late fees won’t be incurred either. Interest will still be accrued, so if borrowers can afford payments, it’s in their best interest to make them. If all of this seems a bit overwhelming, Oldham and Deitering has developed a special program to advise borrowers on the programs they may be eligible for and the help them determine if they qualify for discharge, forgiveness, or suggest the best repayment plan for them. The fee for this analysis is $275. Call 937-898-7673 if you would like to set up an appointment or for any other questions.  

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