After a more than three year pandemic-induced pause, borrowers and the student-loan system are about to return to regular payments, interest and collections on the debt.
Indeed, other analyses indicate that a wide swath of borrowers may struggle to make payments. The median student-loan bill could push student-loan borrowers, except for those with the highest incomes, to face outflows that are larger than what they bring in, according to an analysis by the Bank of America Institute. It’s possible these borrowers may have other sources of income to help them cope because the research was focused on Bank of America accounts.
Amid all these announcements, borrowers are hungry for guidance, said Natalia Abrams, the president of the Student Debt Crisis Center, advocacy organization. A recent webinar hosted by the group on the new repayment plan had roughly 1,000 attendees and 500 questions. Roughly three quarters of respondents polled by the group said they’d like to receive information about student-loan payments resuming “right now” or “yesterday.
“No matter how much prep or money the Department of Education and the servicers had, the system wasn’t built for 40 million people all resuming repayment at the same time,” said Betsy Mayotte, the founder of the Institute of Student Loan Advisors.1. Find out who your servicer is During the course of the payment pause more than 17 million student-loan borrower accounts switched servicers, according to the CFPB.
If you think you’ll be able to comfortably afford your student-loan payment each month, autopay will provide some benefits. For one, borrowers using autopay get a 0.25% discount on their interest rate. In addition, it may increase the likelihood you’ll pay on time because you won’t have to remember to make a payment.
In addition, under SAVE, borrowers will have more of their income protected before they’re required to start making payments. That benefit will also kick in when payments resume in October. “The name of the game isn’t forgiveness, the name of the game is paying the least amount over time,” she said. Borrowers have always had the option to request a change to their payment due date, Buchanan said. For example it may be convenient for borrowers to move their due date if it falls before the date they typically get paid, he said.