NASHVILLE, Tenn. (WTVF) — Raise your hand if you've got student loans.
Almost 8 million Americans are enrolled in the SAVE repayment plan. Interest on those loans has started again, ending a yearlong pause.
Monthly payments, though, are still on hold, for now.
“What this means is that a lot of people are going to see their loan balances grow again," said Consumer Reports' Chuck Bell. "And if you’re already struggling with repaying your student loans, that's just going to make things harder in the future.”
The Student Borrower Protection Center estimates the new interest charges will cost a typical borrower $300 per month or $3,500 a year.
The Department of Education says that once the pause on payments ends borrowers will be responsible for monthly payments that include both the principal and any accrued interest. The Department is urging those enrolled in the SAVE Plan to quickly transition to an alternative Income-Based Repayment Plan to avoid missing out on important loan benefits.
“There's a lot of concern about affordability,” said Carolina Rodriguez with Community Service Society of New York.
Rodriguez is the director of a program that helps people with student loans manage their debt. She says many haven’t updated their income or repayment plan, and that can lead to higher monthly payments.
“The best strategy is to figure out what is your current situation and ability to repay and explore the repayment plan options,” said Rodriguez.
Consumer Reports says, start by logging in to studentaid.gov, the federal student loan portal. That’s where you can check your loan balance, interest rate, repayment plan, and find out who’s managing your loans.
Once you’ve done that, log in to your loan servicer’s website. That’s where you can update your income, change your plan, or apply for a more affordable option.
If you need more help, nonprofit organizations and state programs like student loan help centers can guide you through the process at no cost.
There’s another big reason to stay on top of your student loans: if you stop making payments, it can hurt your credit, and that can lead to serious financial consequences down the road.
Do you have more information about this story? You can email me at jennifer.kraus@newschannel5.com.
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