If you’ve got federal student loans, there are some big changes you need to know about. Interest has started up again for millions of borrowers, and for many, the first step is figuring out where their loans stand. Consumer Reports breaks down what to do and how to stay on track.
Almost 8 million Americans are enrolled in the SAVE repayment plan. Interest on those loans has started again, ending a yearlong pause. However, the payments are still on hold for now. This means that many people will see their loan balances grow again.
And if you’re already struggling to repay your student loans, that will make things harder in the future.
The Student Borrower Protection Center estimates the new interest charges will cost a typical borrower $300 per month or $3,500 a year. The Department of Education says that once the payment pause ends, borrowers will be responsible for monthly payments that include both the principal and any accrued interest. The Department urges those enrolled in the SAVE Plan to quickly transition to an alternative Income-Based Repayment Plan to avoid missing out on important loan benefits.
Carolina Rodriguez at the Community Service Society of New York directs a program that helps people with student loans manage their debt. She says many haven’t updated their income or repayment plan, which can lead to higher monthly payments.
The best strategy is to determine your current situation and ability to repay, and explore the repayment plan options.
Consumer Reports says to start by logging in to studentaid.gov, the federal student loan portal. That’s where you can check your loan balance, interest rate, repayment plan, and find out who’s managing your loans.
Once you’ve done that, log in to your loan servicer’s website to update your income, change your plan, or apply for a more affordable option.
If you need more help, nonprofit organizations and state programs like student loan help centers can guide you through the process at no cost.
Consumer Reports says there’s another big reason to stay on top of your student loans: if you stop making payments, it can hurt your credit, leading to serious financial consequences down the road.
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