Student loan payments start next month, 0% interest days are over: what you need to know
BOSTON - If you have student loans, next month you'll have to make your first payment since 2020. But interest on your loan is a different story, it's already accruing again as of September 1.
Just the thought of getting back to making student loan payments has been looming over millions of borrowers, for these last few years.
According to Lending Tree, Americans owe $1.77 trillion in student loan debt. But if you have a plan, paying these loans can feel a little less overwhelming.
First, is the easiest step:
- Log in to your student account (because some of you haven't done that in a while).
- Figure out how much you owe, how much your payments will be and your interest rate.
- Begin budgeting for your payments.
"If you're still enrolled in school, remember that you don't have to start making payments for the most part—again—unless you've got maybe a private student loan, while you're still in school. There's usually a grace period of a few months after you graduate when you can also avoid making payments," Senior Economist and Student Loan Repayment Expert at Lending Tree, Jacob Channel explained.
Another helpful step you can take is checking your eligibility for the SAVE Plan. SAVE stands for Saving on a Valuable Education.
The new, income-driven repayment plan was put into place by the Department of Education and about 20 million people are estimated to be eligible.
"Parts of it have already been put into effect, but the full plan won't go fully into effect until next year. It is something that some borrowers can start enrolling in right now," Channel continued. "Even if they can't necessarily take full advantage of the SAVE plan, they may still be able to take advantage of other income-driven savings plans that already do exist and are in full effect right now.
You can learn more about the SAVE plan and enroll here.
"The benefits of the SAVE plan, or really any income-driver repayment plan, are that they can help you do things like lower your monthly payments. They can help you avoid extra interest from being added to your loan and generally make it easier for you to pay back what you owe," Channel told WBZ.
What do I do if my loans were transferred to a new servicer?
Channel said sometimes service providers do change. That's not anything to panic about, however if you are in this situation make sure that you look for official correspondence from the Department of Education from your new student loan service provider.
"With that in mind, do be sure that whoever is saying they're your new provider is actually your real provider. You can double check this on studentaid.gov," Channel said.
Which brings us to the next point: be vigilant about scammers who are trying to take advantage of borrowers.
Remember, if an offer or program is legitimate – you should be able to independently call the organization to verify.
How do I find out what my interest rate will be, now that the 0% interest rate has concluded?
Channel said your student loan service provider will tell you what that rate is.
This brings us back to the income-driven repayment plans we mentioned earlier in this article.
"Another big benefit of those is that if you're on one and you qualify for a lower payment—even if that payment is zero--which for some folks it will be, generally speaking folks who earn about $15/hour or less—they see their student loan payments drop to zero. As long as you're on an income-driven repayment plan, and making those payments, then interest is not going to be added to your loan," said Channel.
There have been so many different things said about student loan forgiveness. At this point, what do I need to know?
Earlier this year, the Supreme Court blocked President Biden's student loan forgiveness plan. But there are still other loan forgiveness options that may apply to you.
"The Department of Education does still offer some more targeted student loan forgiveness programs to certain borrowers. And there are quite a few different types of loan forgiveness programs and whether or not you qualify for them will depend on your situation."
Examples Channel gave included: some teachers who teach at low-income schools, people with major disabilities, and people who were defrauded by institutions.
You can read more here.