December 19, 2023
From a lack of awareness and communication to overwhelming options, it is unsurprising why many borrowers have not yet made a payment on their student loan balance.
Only 60% of 22 million borrowers had made a student loan payment by mid-November, according to data published by the U.S. Department of Education, but upcoming 2024 initiatives are offering more time and ease in repayment.
The DOE released the first look at student loan repayment in a blog post since the payment pause expired. Of the 22 million, more than 4 million of these borrowers owe payments for the first time. From a lack of awareness and communication to overwhelming options, it is unsurprising why many borrowers have not yet paid their student loan balance. But interest is accruing now. Experts say that more consequences will accumulate if borrowers don’t act now.
“While most borrowers have already made their first payment, others will need more time,” U.S. Undersecretary of Education James Kvaal wrote in a blog post. “Some are confused or overwhelmed about their options. We want to make sure borrowers know that our top priority is to support student loan borrowers as they return to repayment.”
Dedicated to streamlining the repayment process while reducing delinquency and maintaining stability across modernization efforts, the DOE is offering borrowers who need more time a better opportunity. Here’s what to look for in 2024.
The Department of Education encourages borrowers to join the on-ramp process, a temporary debt repayment program to help borrowers avoid default, delinquency, and mandatory collections. Your loans will be automatically placed in forbearance if you miss a payment before Sept. 30, 2024.
The new SAVE plan is an IDR, which bases your monthly payment on your income and family size. But it may not be the best option for everyone. The plan does offer benefits that could cut payments for millions of borrowers by increasing the income exemption from 150% to 225% of the poverty line. Another key advantage is that the government covers the rest of the accrued interest if your full monthly payment isn’t enough to cover it. As a result, the SAVE Plan can block interest from growing your balance. More elements of SAVE will go into effect in the summer of 2024 and will lower payments even more for borrowers with undergraduate loans.
#DYK: Your federal student loan payment could be as low as $0/month thanks to the Saving on A Valuable Education (SAVE) Plan, a new program to help federal student loan borrowers.
Learn more and apply today: https://t.co/W1NHeZFpgJ #SAVEOnStudentDebt pic.twitter.com/y7iXuFiYLE
LOAN SERVICERS
In April 2023, the U.S. Department of Education announced a new wave of student loan servicers required to assist you with repayment throughout 2024. According to Forbes, five companies received loan servicing contracts with a host of responsibilities and incentives for reducing communication issues and improving customer service. The U.S. Department of Education’s Office of Federal Student Aid (FSA) has extended legacy servicer contracts through December 2024.
The loan simulator on StudentAid.gov can guide you through which loan payment strategy might be best for your current situation.
RELATED CONTENT: Biden Announces $9 Billion More In Student Debt Relief
Enter your Email Address below to get our fun-filled Newsletter!
© 2023 Black Enterprise. All Rights Reserved.