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SALT LAKE CITY — People struggling with student debt have spent the past several years in a political tug of war.
First, they were told not to worry about it during the COVID-19 pandemic, then the White House canceled $400 billion in federal student debt for some students, only for the U.S. Supreme Court to say no.
Now, payments will start again, but with all the twists and turns surrounding forbearance, you might see why people might get financially strapped.
But with student loan payments resuming next month, we asked CNET senior editor Nick Woolney to help us figure it out.
“For many Americans, it has been more than three years since they had to deal with any type of loan repayment,” Woolney said.
Let’s start with the good news for those who are worried about whether they can afford to resume payments: If you miss a payment between now and next September, you’ll still accrue interest, but it won’t hurt your credit.
“There will be a one-year grace period after you repay your student loan, during which failure to pay or request a deferment or forbearance will not impact your credit score,” Woolney said.
But more importantly, if you have student debt, you should consider a Value Education Savings Plan or savings plan.
It could “cut” in half what many student loan borrowers owe. For others, they may owe nothing each month — a monthly payment of $0. It will forgive some loans “after 10 years of repayment, instead of 20 years.” Borrowers will not be charged unpaid monthly interest.
Woolney describes this as the crown jewel of the SAVE plan.
“This really prevents any future horror stories of people paying their loans on time, paying the amount the government told them to pay and the income-driven repayment plan, and then watching their loan balance go up and up,” he said.
It’s an income-driven repayment plan, which means the more you earn, the less you help. This shouldn’t stop people who are living the good life from signing up, Woolney says.
“I can speak for myself,” he said. “I signed up for the SAVE plan. I have a student loan. My new student loan payment was less than half of my previous student loan payment.”
But the important factor is that you need to subscribe to the new version Save the plan To get the benefits. Because even though this is law right now, there are opponents in Congress trying to block the plan.
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