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CNET
3 days ago
- Business
- CNET
Yes, Student Loan Payments Could Rise for SAVE Borrowers. Here's How to Calculate Yours
If you're enrolled in the Saving on a Valuable Education repayment plan, expect your student loan payments to increase. Getty Images/CNET If you're one of the eight million student loan borrowers enrolled in the Saving on a Valuable Education (SAVE) plan, you may have seen student loan payments as low as $0. With the SAVE plan officially struck down, you might be worried about how much you'll be required to pay in the future. Although the Department of Education offers several other income-driven repayment plans, which cap your monthly bill at a percentage of your discretionary income, SAVE was the most affordable repayment plan to date. That means you should expect a higher monthly payment in the future. "The payment is likely going to go up for borrowers enrolled in SAVE," said Elaine Rubin, a student loan policy expert for Edvisors and CNET Money expert review board member. The earliest SAVE borrowers are expected to restart payments is December of this year, according to the Department of Education. However, many experts think the pause will last even longer, through mid-2026. While the forbearance remains in effect, here's how to calculate how much your monthly payment could increase. What are my payment options when SAVE ends? With SAVE off the table, you'll eventually need to switch to another repayment plan. You currently have three other options for income-driven repayment: Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment. "Each plan has its own eligibility rules and repayment formula," says student loan lawyer Adam Minsky. "Many borrowers will have higher monthly payments under these plans compared to the SAVE plan." Alternatively, you could choose a plan that doesn't base payments on your income. These include the standard plan, graduated repayment and extended repayment. If you're enrolling in the Public Service Loan Forgiveness plan, you'll need to choose an income-driven repayment plan and not a standard plan. How much could my student loan payment increase? Most SAVE borrowers will see their payments increase on other payment plans, including IDRs. How much they might increase varies based on your income, household size and debt. To help you get an idea of how much your student loan payment might rise when the SAVE payment pause ends, I reviewed different options available for a single filer who makes $60,000 a year and has a $30,000 student loan balance at a 6.53% interest rate, using Federal Student Aid's Loan Simulator tool. Under SAVE, you would pay approximately $217 per month or less. Under other plans, you could see your payments rise from $70 to $370 per month. There are two situations where you could lower your monthly payment, but you'd be nearly doubling the amount you'd pay over the lifetime of your loan. Here's what it looks like. Income-Contingent Repayment The Income-Contingent Repayment plan sets your monthly payments to 20% of your discretionary income or what you'd pay on a fixed 12-year plan, whichever is less. Using the $30,000 loan example, here's what repayment would look like on ICR: Monthly payment: $290 Total to be paid: $43,919 End of term date: September 2037 If you qualify for PSLF, you'd pay $35,389 on this plan before getting your remaining balance of $7,884 forgiven in April 2035. Income-Based Repayment The Income-Based Repayment plan sets your monthly payments to 10% of your discretionary income if you borrowed loans after July 1, 2014. If you borrowed before that date, your payment would be set to 15%. This plan has a cap on payments — if your income increases, your payments will never be higher than what you'd pay on the standard 10-year plan. Here's what the payments on that $30,000 loan would look like on IBR: Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 If you qualify for PSLF, you'd pay $40,259 on this plan before getting your remaining balance of $1,198 forgiven in April 2035. Pay As You Earn The Paye As You Earn plan sets your payments to 10% of your discretionary income. Like IBR, your payments on PAYE will never go higher than what they'd be on the standard plan. According to the loan simulator, your payments would be the same on PAYE as on IBR based on the $30,000 loan example. Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 This is the last plan on this list that qualifies for PSLF. The forgiveness amount would be the same as the IBR plan. Standard Repayment The standard plan doesn't base your payments on your income. It gives you a fixed payment over 10 years. Monthly payment: $341 Total to be paid: $40,932 End of term date: April 2035 Graduated Repayment The graduated repayment plan has you pay off your loans over 10 years, too. However, payments start out lower and increase every couple of years. While your payment would start out lower, you'll see it jumps significantly over time. This plan is best for anyone starting out in a new career who expects to make significantly more money as they progress. Monthly payment: $196 - $589 Total to be paid: $43,916 End of term date: April 2035 Extended Repayment You can qualify for this plan if you owe at least $30,000. It has fixed payments and spans 25 years. You'd see a lower monthly payment with this plan, but since you're spreading out your payments over two and a half decades, you'll end up paying double the amount you borrowed. Monthly payment: $203 Total to be paid: $60,937 End of term date: April 2050 Note: The above payment options could change in the future. Republicans on the House Education Committee recently introduced a proposal that would eliminate many of the plans above for new borrowers and replace them with two options: a Standard Repayment Plan and a Repayment Assistance Plan. The standard plan would have fixed payments ranging from 10 to 25 years, while the Repayment Assistance Plan would base payments on a borrower's total adjusted gross income and waive monthly unpaid interest. Could I save money by refinancing with a private student loan? Refinancing a loan can be helpful for creditworthy borrowers who can qualify for a low interest rate -- but experts generally warn against refinancing if you have federal student debt. Rubin doesn't recommend refinancing if you're counting on federal student loan benefits, working toward PSLF, enrolled in an income-driven repayment plan or living paycheck-to-paycheck. For most borrowers who were enrolled in SAVE, refinancing with a private lender won't make sense. "Even if you're comfortably making payments, if something were to happen, you might find yourself locked into a very challenging situation," Rubin previously told CNET. When you refinance with a private lender, you're giving up your federal student loan benefits. That means you won't qualify for financial hardship assistance, federal payment pauses, federal loan forgiveness or similar benefits. Once you've refinanced with a private lender, you can't reverse the process. How to prepare for a higher student loan payment Borrowers in SAVE may not have owed any money on their student loans since March 2020 when the first federal forbearance period started. As SAVE makes its way through the courts, experts expect repayment to resume at the end of this year or sometime in 2026. Depending on your income and family size, that could mean fitting a sizable bill into your monthly budget. To prepare for that, Rubin recommends: Use the Department of Education's loan simulator to estimate the size of your monthly payment. Speak with a trusted, nonprofit source, such as Edvisors or The Institute of Student Loan Advisors, for advice on applying for and choosing the best repayment plan for your financial circumstances. Talk to a student loan advisor and an accountant about potential tax strategies to lower your adjusted gross income (used to calculate payments in some cases). Review your current finances to find places to cut or move costs (for instance, eliminating subscriptions, slowing other debt repayment or reducing your savings contributions).
CNET
4 days ago
- Business
- CNET
Your Student Loan Payments Could Soar if You're Enrolled in SAVE. Here's How Much More You Might Pay
Payments likely won't resume before the end of the year. But when they do, yours are likely to go up. Getty Images/CNET The Biden administration's Saving on a Valuable Education (SAVE) plan offered relief to millions of federal student loan borrowers. Under this income-driven repayment (IDR) plan, around 8 million borrowers would have seen their monthly payments capped at a portion of their income -- with roughly half of these borrowers owing $0 per month. But with SAVE officially struck down, your monthly payments are likely to increase if you're enrolled in the plan. "The payment is likely going to go up for borrowers enrolled in SAVE," confirmed Elaine Rubin, a student loan policy expert for Edvisors and CNET Money expert review board member. Experts don't expect the payment pause to lift any sooner than December of this year, and some predict borrowers won't be required to make payments until mid-2026. But regardless of when payments resume, you should be prepared to face higher monthly payments. How much more can you expect to pay? We did the math. What are my payment options when SAVE ends? With SAVE off the table, you'll eventually need to switch to another repayment plan. You currently have three other options for income-driven repayment: Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment. "Each plan has its own eligibility rules and repayment formula," says student loan lawyer Adam Minsky. "Many borrowers will have higher monthly payments under these plans compared to the SAVE plan." Alternatively, you could choose a plan that doesn't base payments on your income. These include the standard plan, graduated repayment and extended repayment. If you're enrolling in the Public Service Loan Forgiveness plan, you'll need to choose an income-driven repayment plan and not a standard plan. How much will my student loan payment increase? Most SAVE borrowers will see their payments increase on other payment plans, including IDRs. How much they might increase varies based on your income, household size and debt. To help you get an idea of how much your student loan payment might rise when the SAVE payment pause ends, I reviewed different options available for a single filer who makes $60,000 a year and has a $30,000 student loan balance at a 6.53% interest rate, using Federal Student Aid's Loan Simulator tool. Under SAVE, you would pay approximately $217 per month or less. Under other plans, you could see your payments rise from $70 to $370 per month. There are two situations where you could lower your monthly payment, but you'd be nearly doubling the amount you'd pay over the lifetime of your loan. Here's what it looks like. Income-Contingent Repayment The Income-Contingent Repayment plan sets your monthly payments to 20% of your discretionary income or what you'd pay on a fixed 12-year plan, whichever is less. Using the $30,000 loan example, here's what repayment would look like on ICR: Monthly payment: $290 Total to be paid: $43,919 End of term date: September 2037 If you qualify for PSLF, you'd pay $35,389 on this plan before getting your remaining balance of $7,884 forgiven in April 2035. Income-Based Repayment The Income-Based Repayment plan sets your monthly payments to 10% of your discretionary income if you borrowed loans after July 1, 2014. If you borrowed before that date, your payment would be set to 15%. This plan has a cap on payments — if your income increases, your payments will never be higher than what you'd pay on the standard 10-year plan. Here's what the payments on that $30,000 loan would look like on IBR: Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 If you qualify for PSLF, you'd pay $40,259 on this plan before getting your remaining balance of $1,198 forgiven in April 2035. Pay As You Earn The Paye As You Earn plan sets your payments to 10% of your discretionary income. Like IBR, your payments on PAYE will never go higher than what they'd be on the standard plan. According to the loan simulator, your payments would be the same on PAYE as on IBR based on the $30,000 loan example. Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 This is the last plan on this list that qualifies for PSLF. The forgiveness amount would be the same as the IBR plan. Standard Repayment The standard plan doesn't base your payments on your income. It gives you a fixed payment over 10 years. Monthly payment: $341 Total to be paid: $40,932 End of term date: April 2035 Graduated Repayment The graduated repayment plan has you pay off your loans over 10 years, too. However, payments start out lower and increase every couple of years. While your payment would start out lower, you'll see it jumps significantly over time. This plan is best for anyone starting out in a new career who expects to make significantly more money as they progress. Monthly payment: $196 - $589 Total to be paid: $43,916 End of term date: April 2035 Extended Repayment You can qualify for this plan if you owe at least $30,000. It has fixed payments and spans 25 years. You'd see a lower monthly payment with this plan, but since you're spreading out your payments over two and a half decades, you'll end up paying double the amount you borrowed. Monthly payment: $203 Total to be paid: $60,937 End of term date: April 2050 Note: The above payment options could change in the future. Republicans on the House Education Committee recently introduced a proposal that would eliminate many of the plans above for new borrowers and replace them with two options: a Standard Repayment Plan and a Repayment Assistance Plan. The standard plan would have fixed payments ranging from 10 to 25 years, while the Repayment Assistance Plan would base payments on a borrower's total adjusted gross income and waive monthly unpaid interest. Should SAVE borrowers refinance with a private student loan? Refinancing a loan can be helpful for creditworthy borrowers who can qualify for a low interest rate -- but experts generally warn against refinancing if you have federal student debt. Rubin doesn't recommend refinancing if you're counting on federal student loan benefits, working toward PSLF, enrolled in an income-driven repayment plan or living paycheck-to-paycheck. For most borrowers who were enrolled in SAVE, refinancing with a private lender won't make sense. "Even if you're comfortably making payments, if something were to happen, you might find yourself locked into a very challenging situation," Rubin previously told CNET. When you refinance with a private lender, you're giving up your federal student loan benefits. That means you won't qualify for financial hardship assistance, federal payment pauses, federal loan forgiveness or similar benefits. Once you've refinanced with a private lender, you can't reverse the process. How to prepare for a bigger student loan payment Borrowers in SAVE may not have owed any money on their student loans since March 2020 when the first federal forbearance period started. As SAVE makes its way through the courts, experts expect repayment to resume at the end of this year or sometime in 2026. Depending on your income and family size, that could mean fitting a sizable bill into your monthly budget. To prepare for that, Rubin recommends: Use the Department of Education's loan simulator to estimate the size of your monthly payment. Speak with a trusted, nonprofit source, such as Edvisors or The Institute of Student Loan Advisors, for advice on applying for and choosing the best repayment plan for your financial circumstances. Talk to a student loan advisor and an accountant about potential tax strategies to lower your adjusted gross income (used to calculate payments in some cases). Review your current finances to find places to cut or move costs (for instance, eliminating subscriptions, slowing other debt repayment or reducing your savings contributions).
Yahoo
25-05-2025
- Business
- Yahoo
How Much Could Student Loan Payments Skyrocket for SAVE Borrowers? We Did the Math
About 8 million federal student loan borrowers had hopes of smaller monthly payments and lower lifetime costs when the Biden administration rolled out the Saving on a Valuable Education (SAVE) repayment plan in 2023. But with SAVE officially shot down, you may be worried about how your monthly payments could change. Under income-driven repayment (IDR) plans, many borrowers who fell below certain income levels have had their payments lowered to $0 per month since March 2020. The new formula for monthly payments under SAVE would have extended that reality to millions more. With SAVE's demise, borrowers already in SAVE stand to see increases in their monthly payments. "The payment is likely going to go up for borrowers enrolled in SAVE," confirmed Elaine Rubin, a student loan policy expert for Edvisors and CNET Money expert review board member. Experts don't expect the payment pause to lift any sooner than December of this year, and some predict borrowers won't be required to make payments until mid-2026. Regardless of when payments resume, you should be prepared to face higher monthly payments. With SAVE off the table, you'll eventually need to switch to another repayment plan. You currently have three other options for income-driven repayment: Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment. "Each plan has its own eligibility rules and repayment formula," says student loan lawyer Adam Minsky. "Many borrowers will have higher monthly payments under these plans compared to the SAVE plan." Alternatively, you could choose a plan that doesn't base payments on your income. These include the standard plan, graduated repayment and extended repayment. If you're enrolling in the Public Service Loan Forgiveness plan, you'll need to choose an income-driven repayment plan and not a standard plan. Most SAVE borrowers will see their payments increase on other payment plans, including IDRs. How much they might increase varies based on your income, household size and debt. To help you get an idea of how much your student loan payment might rise when the SAVE payment pause ends, I reviewed different options available for a single filer who makes $60,000 a year and has a $30,000 student loan balance at a 6.53% interest rate, using Federal Student Aid's Loan Simulator tool. Under SAVE, you would pay approximately $217 per month or less. Under other plans, you could see your payments rise from $70 to $370 per month. There are two situations where you could lower your monthly payment, but you'd be nearly doubling the amount you'd pay over the lifetime of your loan. Here's what it looks like. The Income-Contingent Repayment plan sets your monthly payments to 20% of your discretionary income or what you'd pay on a fixed 12-year plan, whichever is less. Using the $30,000 loan example, here's what repayment would look like on ICR: Monthly payment: $290 Total to be paid: $43,919 End of term date: September 2037 If you qualify for PSLF, you'd pay $35,389 on this plan before getting your remaining balance of $7,884 forgiven in April 2035. The Income-Based Repayment plan sets your monthly payments to 10% of your discretionary income if you borrowed loans after July 1, 2014. If you borrowed before that date, your payment would be set to 15%. This plan has a cap on payments — if your income increases, your payments will never be higher than what you'd pay on the standard 10-year plan. Here's what the payments on that $30,000 loan would look like on IBR: Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 If you qualify for PSLF, you'd pay $40,259 on this plan before getting your remaining balance of $1,198 forgiven in April 2035. The Paye As You Earn plan sets your payments to 10% of your discretionary income. Like IBR, your payments on PAYE will never go higher than what they'd be on the standard plan. According to the loan simulator, your payments would be the same on PAYE as on IBR based on the $30,000 loan example. Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 This is the last plan on this list that qualifies for PSLF. The forgiveness amount would be the same as the IBR plan. The standard plan doesn't base your payments on your income. It gives you a fixed payment over 10 years. Monthly payment: $341 Total to be paid: $40,932 End of term date: April 2035 The graduated repayment plan has you pay off your loans over 10 years, too. However, payments start out lower and increase every couple of years. While your payment would start out lower, you'll see it jumps significantly over time. This plan is best for anyone starting out in a new career who expects to make significantly more money as they progress. Monthly payment: $196 - $589 Total to be paid: $43,916 End of term date: April 2035 You can qualify for this plan if you owe at least $30,000. It has fixed payments and spans 25 years. You'd see a lower monthly payment with this plan, but since you're spreading out your payments over two and a half decades, you'll end up paying double the amount you borrowed. Monthly payment: $203 Total to be paid: $60,937 End of term date: April 2050 The above payment options could change in the future. Republicans on the House Education Committee recently introduced a proposal that would eliminate many of the plans above for new borrowers and replace them with two options: a Standard Repayment Plan and a Repayment Assistance Plan. The standard plan would have fixed payments ranging from 10 to 25 years, while the Repayment Assistance Plan would base payments on a borrower's total adjusted gross income and waive monthly unpaid interest. Refinancing a loan can be helpful for creditworthy borrowers who can qualify for a low interest rate -- but experts generally warn against refinancing if you have federal student debt. Rubin doesn't recommend refinancing if you're counting on federal student loan benefits, working toward PSLF, enrolled in an income-driven repayment plan or living paycheck-to-paycheck. For most borrowers who were enrolled in SAVE, refinancing with a private lender won't make sense. "Even if you're comfortably making payments, if something were to happen, you might find yourself locked into a very challenging situation," Rubin previously told CNET. When you refinance with a private lender, you're giving up your federal student loan benefits. That means you won't qualify for financial hardship assistance, federal payment pauses, federal loan forgiveness or similar benefits. Once you've refinanced with a private lender, you can't reverse the process. Borrowers in SAVE may not have owed any money on their student loans since March 2020 when the first federal forbearance period started. As SAVE makes its way through the courts, experts expect repayment to resume at the end of this year or sometime in 2026. Depending on your income and family size, that could mean fitting a sizable bill into your monthly budget. To prepare for that, Rubin recommends: Use the Department of Education's loan simulator to estimate the size of your monthly payment. Speak with a trusted, nonprofit source, such as Edvisors or The Institute of Student Loan Advisors, for advice on applying for and choosing the best repayment plan for your financial circumstances. Talk to a student loan advisor and an accountant about potential tax strategies to lower your adjusted gross income (used to calculate payments in some cases). Review your current finances to find places to cut or move costs (for instance, eliminating subscriptions, slowing other debt repayment or reducing your savings contributions).
CNET
24-05-2025
- Business
- CNET
How Much Could Student Loan Payments Skyrocket for SAVE Borrowers? We Did the Math
Getty Images/CNET About 8 million federal student loan borrowers had hopes of smaller monthly payments and lower lifetime costs when the Biden administration rolled out the Saving on a Valuable Education (SAVE) repayment plan in 2023. But with SAVE officially shot down, you may be worried about how your monthly payments could change. Under income-driven repayment (IDR) plans, many borrowers who fell below certain income levels have had their payments lowered to $0 per month since March 2020. The new formula for monthly payments under SAVE would have extended that reality to millions more. With SAVE's demise, borrowers already in SAVE stand to see increases in their monthly payments. "The payment is likely going to go up for borrowers enrolled in SAVE," confirmed Elaine Rubin, a student loan policy expert for Edvisors and CNET Money expert review board member. Experts don't expect the payment pause to lift any sooner than December of this year, and some predict borrowers won't be required to make payments until mid-2026. Regardless of when payments resume, you should be prepared to face higher monthly payments. What are my payment options when SAVE ends? With SAVE off the table, you'll eventually need to switch to another repayment plan. You currently have three other options for income-driven repayment: Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment. "Each plan has its own eligibility rules and repayment formula," says student loan lawyer Adam Minsky. "Many borrowers will have higher monthly payments under these plans compared to the SAVE plan." Alternatively, you could choose a plan that doesn't base payments on your income. These include the standard plan, graduated repayment and extended repayment. If you're enrolling in the Public Service Loan Forgiveness plan, you'll need to choose an income-driven repayment plan and not a standard plan. How much will my student loan payment increase? Most SAVE borrowers will see their payments increase on other payment plans, including IDRs. How much they might increase varies based on your income, household size and debt. To help you get an idea of how much your student loan payment might rise when the SAVE payment pause ends, I reviewed different options available for a single filer who makes $60,000 a year and has a $30,000 student loan balance at a 6.53% interest rate, using Federal Student Aid's Loan Simulator tool. Under SAVE, you would pay approximately $217 per month or less. Under other plans, you could see your payments rise from $70 to $370 per month. There are two situations where you could lower your monthly payment, but you'd be nearly doubling the amount you'd pay over the lifetime of your loan. Here's what it looks like. Income-Contingent Repayment The Income-Contingent Repayment plan sets your monthly payments to 20% of your discretionary income or what you'd pay on a fixed 12-year plan, whichever is less. Using the $30,000 loan example, here's what repayment would look like on ICR: Monthly payment: $290 Total to be paid: $43,919 End of term date: September 2037 If you qualify for PSLF, you'd pay $35,389 on this plan before getting your remaining balance of $7,884 forgiven in April 2035. Income-Based Repayment The Income-Based Repayment plan sets your monthly payments to 10% of your discretionary income if you borrowed loans after July 1, 2014. If you borrowed before that date, your payment would be set to 15%. This plan has a cap on payments — if your income increases, your payments will never be higher than what you'd pay on the standard 10-year plan. Here's what the payments on that $30,000 loan would look like on IBR: Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 If you qualify for PSLF, you'd pay $40,259 on this plan before getting your remaining balance of $1,198 forgiven in April 2035. Pay As You Earn The Paye As You Earn plan sets your payments to 10% of your discretionary income. Like IBR, your payments on PAYE will never go higher than what they'd be on the standard plan. According to the loan simulator, your payments would be the same on PAYE as on IBR based on the $30,000 loan example. Monthly payment: $312 Total to be paid: $41,473 End of term date: August 2035 This is the last plan on this list that qualifies for PSLF. The forgiveness amount would be the same as the IBR plan. Standard Repayment The standard plan doesn't base your payments on your income. It gives you a fixed payment over 10 years. Monthly payment: $341 Total to be paid: $40,932 End of term date: April 2035 Graduated Repayment The graduated repayment plan has you pay off your loans over 10 years, too. However, payments start out lower and increase every couple of years. While your payment would start out lower, you'll see it jumps significantly over time. This plan is best for anyone starting out in a new career who expects to make significantly more money as they progress. Monthly payment: $196 - $589 Total to be paid: $43,916 End of term date: April 2035 Extended Repayment You can qualify for this plan if you owe at least $30,000. It has fixed payments and spans 25 years. You'd see a lower monthly payment with this plan, but since you're spreading out your payments over two and a half decades, you'll end up paying double the amount you borrowed. Monthly payment: $203 Total to be paid: $60,937 End of term date: April 2050 Note: The above payment options could change in the future. Republicans on the House Education Committee recently introduced a proposal that would eliminate many of the plans above for new borrowers and replace them with two options: a Standard Repayment Plan and a Repayment Assistance Plan. The standard plan would have fixed payments ranging from 10 to 25 years, while the Repayment Assistance Plan would base payments on a borrower's total adjusted gross income and waive monthly unpaid interest. Should SAVE borrowers refinance with a private student loan? Refinancing a loan can be helpful for creditworthy borrowers who can qualify for a low interest rate -- but experts generally warn against refinancing if you have federal student debt. Rubin doesn't recommend refinancing if you're counting on federal student loan benefits, working toward PSLF, enrolled in an income-driven repayment plan or living paycheck-to-paycheck. For most borrowers who were enrolled in SAVE, refinancing with a private lender won't make sense. "Even if you're comfortably making payments, if something were to happen, you might find yourself locked into a very challenging situation," Rubin previously told CNET. When you refinance with a private lender, you're giving up your federal student loan benefits. That means you won't qualify for financial hardship assistance, federal payment pauses, federal loan forgiveness or similar benefits. Once you've refinanced with a private lender, you can't reverse the process. How to prepare for a bigger student loan payment Borrowers in SAVE may not have owed any money on their student loans since March 2020 when the first federal forbearance period started. As SAVE makes its way through the courts, experts expect repayment to resume at the end of this year or sometime in 2026. Depending on your income and family size, that could mean fitting a sizable bill into your monthly budget. To prepare for that, Rubin recommends: Use the Department of Education's loan simulator to estimate the size of your monthly payment. Speak with a trusted, nonprofit source, such as Edvisors or The Institute of Student Loan Advisors, for advice on applying for and choosing the best repayment plan for your financial circumstances. Talk to a student loan advisor and an accountant about potential tax strategies to lower your adjusted gross income (used to calculate payments in some cases). Review your current finances to find places to cut or move costs (for instance, eliminating subscriptions, slowing other debt repayment or reducing your savings contributions).
CNET
07-05-2025
- Business
- CNET
Does Student Loan News Have You Scared? I Talked to an Expert to Answer Your Top Questions
What's going on with student loans? It's a question that's difficult to pin down when the answers seem to shift every week. As a reporter who's covered student loans since the beginning of the pandemic, and a borrower myself, it's a topic I'm dialed in on, and even I'm finding it hard to keep track of all the changes. News of wage garnishments, restarting payments for SAVE borrowers and even the decision to potentially move the student loan portfolio from the Department of Education to the Small Business Administration has left millions of borrowers confused. How will any of this work? What will payments look like for the nearly 8 million borrowers on SAVE? And when will teachers, nurses and other public servants who've satisfied the terms of the Public Service Loan Forgiveness program see loan discharges? Reddit is awash with questions about what's going on with student loans, with some users considering switching to a private lender for a potentially lower payment and some predictability after years of overwhelming pendulum swings. I spoke to a student loan expert, Edvisors Corporate Communications Director Elaine Rubin, to help answer some of your most pressing student loan questions. What does the new student loan payment proposal mean for current borrowers? Last week, Republicans put forth a new bill that would change the way student loan payments are calculated and repaid. The proposal hasn't yet been approved by Congress, and it's unclear whether any of the rules in this document will be finalized. If the bill were to pass, borrowers with loans issued before July 1, 2026, wouldn't see many changes, unless they're enrolled in the income-contingent repayment plan. Borrowers on ICR would be moved to income-based repayment, and their monthly bill would be capped at 15% of their discretionary income. Since SAVE is dead, should borrowers move to another IDR plan? You may've heard that payments will be restarting soon for SAVE borrowers, which can be confusing, since your monthly payment will likely change. You can apply for another income-driven repayment plan if you've found one that's a good fit, but Rubin said there's no action you need to take right now. Since it's likely you'll either be moved to another payment plan or given a window of time to select a new repayment plan, exploring other IDRs can help you calculate your new monthly payment. You can check out your repayment options using the student loan simulator at Are any changes happening to the Public Service Loan Forgiveness plan? Teachers, nurses and other public servants enrolled in the Public Service Loan Forgiveness Plan have been on an even more tumultuous ride in the past few years. After President Joe Biden's administration expanded PSLF to ensure more borrowers would receive forgiveness, the program was moved in-house to the Department of Education, causing a variety of delays. Earlier this year, President Donald Trump announced some changes in eligibility for the PSLF, preventing anyone working for an organization deemed illegal from receiving forgiveness, but no official changes have been made to the program, according to Is debt relief through PSLF still being processed? Some borrowers on Reddit have said they've met the forgiveness requirements but have yet to receive debt relief through either the PSLF or PSLF buyback program. "We've heard there have been delays in processing," Rubin said. "There are a lot of moving pieces in the background right now that are making it hard to estimate how quickly forgiveness will be granted." Whatever you do, Rubin warns not to stop making your monthly payments while you wait, as this could lead to other complications, such as wage garnishment while your forgiveness is being evaluated. Reach out to your loan servicer to figure out your best move while waiting for loan forgiveness, Rubin suggested. The servicer might be able to put your payments on hold or in forbearance in the meantime. Any extra money you pay should be returned to you in the form of a refund after your forgiveness is processed. Can you get approved for a lower student loan payment if your income has decreased? If you're on an income-driven repayment plan and your income has decreased, it can be helpful to recertify your income to see if your servicer will lower your monthly payment. Typically, the Department of Education requires borrowers to recertify their income annually. But this process has been on hold since the pandemic, with the expectation that it'll resume in 2026. To have your income recertified by the Department of Education, you'll need to fill out an application at and select the option "recertify or change your income-driven repayment plan." It could take some time to process your application, Rubin noted. "Until the actual process completes and the new payment is approved, the borrower does have to make their required original monthly payments." If your income has increased, there's no need to recertify until 2026. Should I refinance my student loans with a private lender? If you're panicked about possible wage garnishment or worried about a higher monthly student loan payment, you might've been exploring other options, such as refinancing your student debt with a private lender. Though it rarely makes sense for borrowers to switch from federal to private student loans, Rubin acknowledged that this option could make sense, but only for a very specific borrower. Rubin said borrowers like dentists or doctors, who earn higher incomes and wouldn't qualify for any of the benefits of IDR plans or other federal student loan offers, might benefit from refinancing with a personal loan -- in some cases. You'll want to review your interest rate and any loan fees before making this decision. For the large majority of borrowers, Rubin does not advise refinancing with a private student loan lender. You'll be forfeiting your federal borrower protections, benefits and potential forgiveness options. And once you refinance your federal student debt with a private lender, you can't ever move this debt back to the federal student loan program. "It's typically not recommended for borrowers who are relying or depending on an income-driven repayment plan," said Rubin, "I especially don't recommend it to anybody who's living paycheck to paycheck. Even if you're comfortably making payments, if something were to happen, you might find yourself locked into a very challenging situation." In addition, with many banks tightening their borrowing requirements, Rubin also said it could be an "extreme challenge" for borrowers to find a private student lender that would approve them for a refinancing loan. You'll typically need a high credit score and low debt-to-income ratio to qualify for the best terms. Instead of refinancing your debt with a private lender, Rubin said, borrowers should look into income-driven repayment plans, talk to their servicers about financial hardship, or consider loan consolidation if they qualify. Is my student loan account being moved to collections? On May 5, the Department of Education resumed efforts to begin collecting on defaulted student loan debt. If your loans are in default -- meaning you're 270 days or more past due on payments -- expect them to be moved to a collections agency. Once your account is moved to collections, you'll receive a letter from the Department of Education with steps to potentially get your loans out of default. If you do nothing, wage garnishment will begin in 30 days. Your wages could be garnished for up to 15% of your take-home pay. To avoid having your paycheck docked, you can apply for loan rehabilitation, where you voluntarily re-enter repayment and after nine consecutive on-time payments, your loans get pulled out of default. You may also be able to apply for loan consolidation if you have multiple loans with varying interest rates. Consolidating your existing federal loans into a new direct loan could lower your interest rate and monthly payments, making it more affordable to repay your debt. If you're behind on payments but not yet in default, try reaching out to your servicer to work out a payment agreement. You should also check to see if you qualify for an income-driven repayment plan that could lower your monthly bill.
