Federal student loans will resume accruing interest in September and payments will begin in October after a three-year pause
College Now Greater Cleveland is a free resource for people who are seeking to understand the student loan repayment landscape and sort out individual student loan debt situations. The resources include expert advice on loan forgiveness and consolidation plans.
The U.S. Supreme Court determined that the Biden Administration does not have the authority to act on its proposal to eliminate $10,000 of student debt from borrowers earning less than $125,000 per year, with an additional $10,000 in loan forgiveness for Pell Grant recipients. At the same time, the Covid-era three-year pause on repaying federal student loans and accruing interest will come to an end on Aug. 30.
More than half of college students leave their postsecondary institution with student loan debt, with the total amount of debt owed in the U.S. at $1.75 trillion (including both federal and private loans). The massive amount of debt that students rack up can have an impact reaching far beyond graduation, with many students paying back various student loans over 20 to 30 years. Being saddled with this extensive debt can prevent borrowers from making other major purchases – including a home or a car – until student debt is paid down while also struggling to afford large monthly student loan payments. College Now Greater Cleveland is here to help!
Members of College Now’s Adult Learner team are experts in guiding people through the confusing student loan repayment landscape, and they can work with you (free of charge!) to answer questions about your own student loan payments, including which repayment plan is best for you, how to consolidate your loans, or if you qualify for loan forgiveness program. Even if you just want to talk through how repayment will work – our team is here for you.
We recently worked with Maria, a social worker, who had hundreds of thousands of dollars in strident loan debt that was preventing her from being able to retire; she needed to earn an income in order to make her monthly student loan payments. Our team guided Maria through the process of receiving student loan debt forgiveness under the expanded and time-limited Public Service Loan Forgiveness program, allowing her to have more than $200,000 in loans forgiven. With that burden of debt lifted, Maria has been able to move forward with her life and plan for retirement.
Since it’s been more than three years since many borrowers have been required to make their federal student loan payments, there are undoubtedly important things borrowers need to know ahead of payments potentially restarting this at the end August (beside contacting College Now for help!):
- Get financially prepared for payments to restart! This is the most important first step – to get ready to make an additional payment every month. Now is the time to start thinking about how you’re going to fit your loan payments back into your budget.
- Log in to the studentaid.gov portal to review your account and reset your FSA ID if needed. If you haven’t been into your student aid account since the payment pause began, you might not remember what your loan balance looks like or what your monthly payment might be – so log in to review it and get back up-to-speed with your loans!
- Pay attention to payment plans. Borrowers should prepare to pay via the standard payment plan or apply for an income-driven repayment plan. This means reviewing one’s budget to see what repayment amount is feasible for someone’s current financial situation.
If you’re a recent graduate, please note that you will need to choose a payment plan right away, as your loan will default to the standard payment plan, which will allow you to pay off your loan in full in 10 years – which is fine if you can afford it. There are eight other plans that could reduce your monthly payment, with eligibility based on your current income, your current student loan debt and your employer. Let College Now help you to determine which plan is right for you.
- Make sure to recertify your employment and income annually. Situations can change throughout a year that may influence your eligibility for some federal student loan repayment plans. You will need to reapply for your payment plan each year to keep your account current.
- If you are a parent with Parent PLUS loans, meet with the College Now team to learn about repayment options.
- If you work for government or nonprofit organization, you may be eligible for student loan forgiveness if you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. To apply for PSLF, start by searching to see if the organization for which you work is eligible. If it is, please contact College Now to walk you through next steps.
- If you’re a recent graduate, your income may be lower but your student loan debt is high. Now is the perfect time to apply for income-based repayment plans and forgiveness programs. But even if you’ve been out of college for years, make an appointment with College Now so we can help you check up on your loan repayment situation!
Whatever your current situation, College Now can help put you on the right path! Our guidance is always free, and appointments can take place in person at our Cleveland or Akron Resource Centers or virtually with one of our Adult Programs and Services team members.
To schedule an appointment, call 216.635.0151 or complete the online form.
