Student debt repayment is a topic that many people are interested in, especially in the current economic situation. Here are some things you need to know about it:
- Standard student loan repayment is a plan where you pay a fixed amount every month for 10 years or less, depending on your loan balance. This plan can help you save money on interest, but it may also have higher monthly payments than other plans1.
- Income-driven repayment plans are plans that adjust your monthly payments based on your income and family size. These plans can lower your payments and offer loan forgiveness after 20 or 25 years of repayment, but they may also increase the total amount of interest you pay over time. You need to apply for these plans and recertify your income every year2.
- Loan consolidation is a process where you combine multiple federal student loans into one loan with a single servicer and a single monthly payment. This can simplify your repayment and give you access to more repayment plans, but it may also extend your repayment term and increase the total amount of interest you pay over time. You can apply for loan consolidation online or by mail2.
- Loan forgiveness and discharge are programs that cancel some or all of your federal student loan debt under certain circumstances, such as working in public service, teaching in a low-income school, becoming permanently disabled, or being defrauded by your school. You need to meet specific eligibility criteria and submit an application to benefit from these programs2.
- The Biden administration has announced some changes and initiatives related to student debt repayment, such as:
- Cutting student loan payments for millions of borrowers to $0 until October 2023 as part of the SAVE Plan3.
- Canceling $39 billion in student debt for more than 800,000 borrowers who have been paying their loans for decades4.
- Extending the pause on federal student loan payments and interest until January 2024 due to the COVID-19 pandemic2.
I hope this information helps you understand student debt repayment better. If you have any questions or need more guidance, you can contact your loan servicer or visit studentaid.gov for more resources.