Due to recently announced changes, you may already be eligible for student loan forgiveness. (iStock)
president joe biden announced last week He said he would shorten the deadline to provide forgiveness to some student loan borrowers enrolled in the Savings for a Valuable Education (SAVE) plan.
Starting next month, borrowers who initially borrowed less than $12,000 to attend college and had a repayment period of about 10 years will have no remaining debt. To be eligible, the borrower must enroll in her SAVE plan.
The Department of Education has also launched an outreach and email campaign to encourage borrowers who are not currently enrolled in SAVE to do so as they may benefit from this reduced repayment period. Students who attended community college will be most affected because they typically borrow less. The Department estimates that SAVE plans will make 85% of future community college borrowers debt-free within their 10 years. The SAVE plan also helps borrowers who are likely to struggle with their loans, as most defaulting borrowers' original loan amount is less than his $12,000.
As of early January, 6.9 million borrowers had already enrolled in SAVE plans, and more than 3.5 million had at least $130 billion in student loan relief.
“The Biden-Harris Administration is not only the most affordable student loan repayment plan ever, it also puts community college students and other low-balance debtors on the path to debt forgiveness faster than ever before,” said Miguel, U.S. Secretary of Education. “We designed the SAVE plan to put it on track.” Cardona said. “Our ability to provide this relief to debtors months ahead of schedule is a testament to the Biden Administration's commitment to providing relief to as many debtors as possible as quickly as possible.”
If you are having trouble paying your private student loans, there is no federal relief available to you. You may also consider refinancing your loan at a lower interest rate to reduce your monthly payments. Visit Credible to see personalized rates in minutes.
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SAVE helps families plan for college
According to a recent Sallie Mae and Ipsos report, families spent about $28,000 on college in the 2022-23 academic year, an 11% increase from $25,313 in the 2021-22 academic year, with half of the spending coming from income. He said he was paying for it with his savings. investigation. Scholarships and grants were used by 76% of families, covering 29% of costs, and 41% of families reported borrowing for college, covering 19% of costs. did.
Cardona said the Biden administration's SAVE plan is essential for people who already have student loans and families planning how to pay for college today.
“Today's announcement gives borrowers even more reason to check out their SAVE plans and see if they qualify for early debt relief,” Cardona said. President Biden's SAVE plan will not only benefit millions of current borrowers with lower monthly payments, protection from runaway interest rates, and an expedited timeline for debt forgiveness; and provide future students with a more affordable path to earning a college degree or certification. . ”
If you are currently in school or planning to start school soon and need more financial aid than you can receive through the FAFSA, consider taking out private student loans while interest rates are low. Visit Credible to find the rate that's right for you without affecting your credit score.
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New FAFSA could leave families shortchanged
The 2024-25 FAFSA form expands eligibility for federal student aid, including Pell Grants, and provides a streamlined user experience, according to the Department of Education. Updates to student aid calculations will make approximately 610,000 new students from low-income backgrounds eligible to receive federal Pell grants. Applicants may also choose to skip up to 26 questions depending on their circumstances.
However, the 2024-25 FAFSA, which includes a three-year-old table for assessing the ability to pay for college tuition, does not accurately reflect the current high-inflation environment and could potentially cost millions more. This means that households eligible for thousands of dollars less in financial aid than they would otherwise be eligible for. According to higher education expert Mark Kantrowitz, it's worth it.
“In a normal year, if inflation was moderate, these tables would adjust slightly,” Kantrowitz said. report. “However, inflation rates have been very high recently, increasing by 18.32% from April 2020 to April 2023. ” until the 2025-26 FAFSA. ”
If you're looking to take out private student loans, don't explore your loan options alone, as federal loans can't cover all of your college costs. Credible can help you compare student loan companies (and hopefully find you the lowest interest rate for what you're looking for).
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