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SALT LAKE CITY — People with student debt have spent the last few years caught in a political tug-of-war.
First they were told not to worry during the COVID-19 pandemic, then the White House canceled $400 billion in federal debt for some students, only to have the U.S. Supreme Court reject it.
Now payments are resuming, but with all the twists and turns surrounding forgiveness, you may see why people can develop financial problems.
But with student loan payments set to resume next month, we asked CNET Editor-in-Chief Nick Wolny to help us keep track.
“For many Americans, it has been over three years since they have had to deal with any type of loan payment,” Wolny said.
Let’s start with the good news for those worried about whether they can afford to resume their payments: If you miss a payment by next September, you’ll still accrue interest, but it won’t hurt your credit score impaired.
“After resuming student loan repayment, there will be a one-year grace period during which nonpayment or requesting a deferment or forbearance will not impact your credit score,” Wolny said.
But most importantly, if you have student debt, you need to look into the Saving on a Valuable Education or SAVE plan.
It could “halve” the debt of many student loan borrowers. Others may owe nothing per month – a $0 monthly payment. Some loans are made “after 10 years of payments instead of 20 years.” And borrowers will not be charged any unpaid monthly interest.
Wolny calls this the crown jewel of the SAVE plan.
“This really prevents future horror stories of people repaying their loans on time, paying the government-required amount and their IDR (income-driven repayment) plan, and then just watching their loan balance keep rising. ” he said.
It’s an income-driven repayment plan, meaning the more you earn, the less it helps you. But that shouldn’t stop people who earn well from signing up, says Wolny.
“I can speak for myself,” he said. “I signed up for the SAVE plan. I have a student loan. And my new student loan payment was less than half of my previous student loan payment.”
However, an important factor is that you must enroll in the new SAVE plan to take advantage of the benefits. Because even though it is a law for now, there are opponents in Congress who are trying to block the plan.
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Matt Gephardt
Matt Gephardt has worked in television news for more than 20 years and as a reporter since 2010. Today he is an investigative consumer reporter for KSL TV. You can find Matt on Twitter at @KSLmatt or email him at [email protected].