DAYTON — Student loan borrowers are preparing to resume payments for the first time in three years.
Federal student loan repayments are set to resume on October 1, and financial experts say now is the time to get a plan together.
The vast majority of student loan debt is federal loans as Americans owe more than $1.5 trillion in student loan debt.
News Center 7 Consumer Reporter Xavier Hershovitz spoke with a local debt attorney.
He says people should first and foremost know how much they owe in student loan debt and who they owe it to.
There are two types of student loans, federal and private.
Hershovitz says those private loans never took a timeout like federal student loans, but in just a few weeks, federal student loan repayments will resume for the first time since the Covid-19 pandemic.
There is a new federal program available to help students get those debts paid off.
Andrew Zeigler, managing partner at Kennel Zeigler, believes that the government’s new Save program will help a lot of borrowers.
It’s called Saving on A Valuable Education (S.A.V.E.).
These types of loans are eligible:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans that did not repay any PLUS loans made to parents.
Zeigler told Hershovitz there is also some leniency for the next year when it comes to missed payments.
“It’s called this on-ramp to repayment. Just trying to get people back and pay their student loans,” he said. “So, for next year, they’re not really going to penalize you. They’re not going to report any delinquencies to credit reports and I’m going to fault your loans. If you’re if you’re missing payments.”
Hershovitz reports will do three things:
- It lowers monthly payments by increasing the income exemption to 225% of the poverty line.
- It eliminates 100% of the remaining interest after a scheduled payment is made.
- It excludes spousal income for borrowers who are married and file separately.
Zeigler told Hershovitz that he believes this will help many borrowers.
“People are going to be surprised it’s going to be a lot lower than what they think it’s going to be,” he said. “If it’s still too high, you owe the traditional forbearance. If you’re unemployed, you can get an unemployment deferment all those still exist.”
Zeigler says people learn more about the S.A.V.E. program by visiting this website.
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