There is an exciting update for those who’ve taken out loans to go to college and are dealing with hefty loan payments. Paying back student loans can be hard, especially if you don’t have a lot of money saved up after you finish college.
Now, the federal government has a plan to help. It’s called “income-based repayment.” This means that the amount you pay each month depends on how much money you make and the size of your family instead of a fixed amount every month based solely on the size of your loan and the number of years for repayment. This makes it easier for you to manage your loan payments.
Let’s dive into the details and break it down.
People who took out loans for college now have a flexible option to pay them back. It’s called the Saving on a Valuable Education (SAVE) program. The SAVE program does not offer debt forgiveness completely, but you may see some of your debt forgiven under this plan.
The program will use your income and the size of your family to figure out how much you need to pay each month. You may not need to pay anything each month or may save as much as $1,000 every year. And as long as you make your monthly payments, interest will not add up.
Am I qualified?
If you have certain types of federal loans from the government, you can qualify for the SAVE program. This includes unsubsidized, direct subsidized, and consolidated loans, and direct PLUS loans for graduate students. If you have loans that aren’t directly from the government, you might need to combine them into a government loan to use SAVE.
Parents who borrowed to help their kids with college can’t use SAVE, but they can check out other ways to pay based on their income at studentaid.gov.
For additional helpful information about the SAVE program, check out: https://studentaid.gov/announcements-events/save-plan.
What do I need to do next?
If you qualify, you can now apply at studentaid.gov/SAVE. It should take about 10 minutes to complete. The program makes it easy for you to enroll each year automatically. So, you won’t have to keep applying or making updates.
You should apply soon. After three years of stopping payments, you’ll have to start paying again in October, and interest will start growing in September. So, don’t wait too long!
In a Nutshell
If college loans have been bugging you, this new plan could save you lots of money. It takes the pressure off paying back when money’s tight and lets you adjust based on your income. So, go ahead and explore this fresh payback path!
*The information provided in this blog post is for general information purposes only and should not be viewed as financial or other professional advice. If you are seeking financial or other professional advice, please consult a financial planner or other appropriate professional.