INDIANAPOLIS – Student loan payments will start up again for millions of Americans in just a few short months.
Interest will start accruing as of September first with payments expected to resume a month later.
For Franklin Indiana native Elizabeth Nance, this news isn’t welcomed. She is a nurse, but she hasn’t always been. She says it took her a while to get her degree. Because of that, along with a lack of knowledge surrounding student loans, she has racked up a hefty bill with no way to pay it back.
“As a single parent with two kids I am never going to pay off my what is today $125,000, " Franklin native Elizabeth Nance said.
Nance's loan was around $60,000 to begin with. She like many have been crippled by interest rates. Those rates are something the Biden administration is hoping to help with through it's new income driven repayment plan called Saving On a Valuable Education or the SAVE plan.
"The SAVE plan is expected to provide most borrowers with the lowest monthly payment when compared to some of the other plans that they would have available under that income driven umbrella,” Rachel Rotunda the Director of Government relations with the National Association of Student Financial Aid Administrators said. “Changes that the administration has made to this plan will provide some more generous benefits to borrowers and in many cases, it will decrease the amount that they are paying in those monthly payments."
Along with the potential for monthly savings, it will also control interest rates for people paying their loans back.
"For borrowers that are enrolled in this new plan any interest that is not covered by their monthly payment amount will be forgiven, "Rotunda said.
The Biden administration is also giving people who may struggle to pay their loans a year to get on their feet. They are doing so by getting rid of the most severe punishments for people not paying.
"For a borrower who does miss a payment under this sort of 12-month period they will not be reported to credit bureaus, they will not be placed in default or referred to debt collection agencies,” Rotunda said. “So we are going to have this long on ramp. "
This doesn't apply to everyone. For people like Nance she says she won't benefit from the SAVE plan because she has private and federal student loans. The SAVE plan is only applied to federal student loans. She is hoping changes to federal law will allow her to take control of her finances. She wants the option to include her student loans in a bankruptcy filing, something that is currently not allowed.
"Give me my original loan amount and let me pay on that so I can move on with my life because I didn't ask for where I'm at,” Nance said. “There is not a plan that's really going to fix that unless you give me my bankruptcy rights back. Let me go and call my shots not the Department of Education. “
The National Association of Student Financial Aid Administrators says borrowers should be contacting their loan provider now.
Providers are expecting to have long wait times once interest starts accruing again in September with payments resuming in October.
They have resources for borrowers who aren’t sure where to start. Theirtoolkit breaks down what steps you need to take to begin. You can also use this simulatorto figure out how much you will have to start paying.
You can apply for the Biden administration's new income-driven student loan repayment plan. It takes about 10 minutes to enroll. With the SAVE plan some borrowers could get their monthly bills cut in half and remaining student debt canceled after making at least 10 years of payments. To apply click here.
For more information about the Biden Administrations SAVE plan clickhere.