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In our series Consumer Corner, NBC6 Responds takes your money questions to the experts.
Each week, we will feature a different consumer question.
Question: “Are my student loans on pause?”
Expert: Hanneh Bareham, Bankrate Analyst
Answer:
Borrowers with federal student loans have seen tons of changes over the last couple of years.
Payments have stopped, started, and stopped again for some borrowers.
The latest pause impacts about 8 million people who are enrolled in the SAVE Plan. The SAVE plan is a new income-driven repayment program that came out last fall. It offers lower monthly payments and loan forgiveness in as little as 10 years for certain people.
But the program is now facing legal challenges.
“The biggest news for borrowers is that all payments have been placed on hold while this moves through the courts,” Bankrate Analyst Hanneh Bareham said.
Bareham says it could take months or possible longer for the legal issues to be settled.
In the meantime, the education department has put borrowers in the save plan on administrative forbearance.
“For SAVE plan borrowers specifically right now because the plan is completely blocked, in its entirety right now, interest will not accrue, payments will not be due, and borrowers do not have to do anything. But if they are enrolled in any other kind of plan, these missed payments will not count as progress toward those plans,” Bareham said.
Without interest accruing now could be the best tome to make payments, according to Bareham.
“I would recommend if borrowers can make payments, make those payments, if interest isn’t accruing you are just going to see that payment reduced further and faster,” Bareham said.
Something else to keep in mind is there is a new student loan forgiveness initiative in the works.
The new program could impact as many as 25 million people. The education department recently send out emails allowing borrowers to opt out of the new program before it begins potentially in October.
If you have questions about your student loan payments or if you want to opt out of the new forgiveness program it is best to reach out directly to your student loan servicer.
